What to know today

  • There’s no “market,” there’s just people.
  • Would you ride in a robotaxi?
  • Safety plays and rocket ships…
markets

People Are People

And they are irrational.

As he often does, the great Eddy Elfenbein dropped some really good knowledge during his conversation with Jim O'Shaughnessy on the April 18 InfiniteLoops podcast.

“There’s no such thing as the market,” Eddy explained. “There’s just people.”

And, after selling Big Tech on Friday, people were buying Big Tech on Monday. The Nasdaq Composite closed last week with a 2.05 percent loss and opened this week with a 1.11 percent gain.

Nvidia $NVDA – the most important stock on planet Earth, according to the people on Goldman Sachs’s $GS trading desk – was down 10.00 percent on Friday and was up 4.35 percent on Monday. 

What changed?

Well, maybe people have a better appreciation for what Meta Platforms $META and Microsoft $MSFT and Alphabet $GOOGL will have to say later this week about their plans for AI hardware spending.

The thing for NVDA will be finding a happy place in the market for its recently introduced Blackwell chips while those heavyweights invest in AI data centers as well as their own chips.

The Nasdaq Composite, the S&P 500, and the Dow Jones Industrial Average all traded higher on Monday, April 22, 2024.

But that’s just a way of qualifying it.

As Eddy said to Jim, "That's one of the problems about quantitative things is you're trying to add numbers, you're trying to distil something that is at root is just highly emotional, and it's a very human entity."

That’s just the way it is with markets and people: irrational, no real rhyme or reason from one day to the next, a fantastically complex system comprising innumerable decisions by uncountable humans. 

The good news, as Mish Schneider notes at the conclusion of her Weekly Market Outlook, is that we’re in a blackout period for Federal Reserve speakers all the way until the press conference following the May 1 Federal Open Market Committee meeting.

That means the market could find its way in terms of interest rates as well as earnings, “on its own without interference,” as Mish put it. We have more from Mish below.

Until Friday’s release of Personal Consumption Expenditure Price Index data for March, earnings from META (after Wednesday’s close) and MSFT and GOOGL (after Thursday’s close) are The Most Important Thing.

But we will have updates on the US housing market, the services and manufacturing sectors, and gross domestic product too.

People probably won’t react as much to those less fascinating figures.

deep dive

Tesla’s Torture Treatment

Is the worst yet to come?

Something else from Eddy Elfenbein’s conversation with Jim O’Shaughnessy struck me, probably because of what’s happening with Elon Musk and Tesla $TSLA.

“The stocks don’t know you own them,” Eddy said to Jim. “And even if they did know they still wouldn’t care.”

That sounds to me a lot like, “Elon Musk is not your friend.”

TSLA was down another 3.40 percent on Monday, extending its year-to-date loss to 42.83 percent and its slide from its November 4, 2021, all-time closing high of $409.97 to 65.35 percent.

Investors are not impressed with Elon’s plans, and TSLA’s post-earnings-release conference call promises to be explosive and entertaining and, perhaps, really, really expensive for shareholders.

Most recently – as in, over the weekend – TSLA announced price cuts for its Model 3 and its Model Y in markets including the US, China, and Germany.

Tesla $TSLA traded down to 52-week lows on Monday, a day before management was scheduled to report first-quarter earnings.

Bloomberg’s Ed Ludlow and Dana Hull led off their review of recent events and preview of TSLA’s first-quarter earnings release this way:

Elon Musk’s underlings at Tesla Inc. are accustomed to chaos. It comes with the territory of working for a chief executive who sets exacting targets and often abruptly switches directions — whose biographer describes his more intense moods as “demon mode.”

But even by Tesla standards, this year has been unruly.

It’s not just “people” who are irrational: It’s Elon Musk too.

If once his madness was taken for genius, now people are unimpressed by the potential for a 40 percent year-over-year decline in operating profit and the first decline in revenue since the pandemic era.

It’s important to note that people also valued TSLA more than $1 trillion above a company like Toyota Motor $TM even though it generated approximately one-third of its sales and profits.

TSLA will post its financial results for the first quarter after the market closes today. The company’s conference call will convene at 5:30 p.m. ET.

deep dive |
April 23, 2024

Tesla’s Torture Treatment

WEEKLY MARKET OUTLOOK

Gold vs. Bitcoin, Bitcoin vs. Gold

They just don’t move together.

Gold had its biggest one-day loss in more than a year on Monday.

This is a good kind of tarnish, as in the present environment the yellow metal is perceived to be a safe haven, its recent price action a reflection of the safety trade amid ratcheting geopolitical tensions.

Israeli leaders appear to be responding favorably to efforts by allies to convince it to temper its response to Iran. Iran continues to take measured steps and make measured comments in an effort to avoid further escalation.

Bitcoin $BTC, meanwhile, was rallying in the aftermath of the fourth halving on April 19, rising as high $66,803.30 during the regular trading day as defined by New York Stock Exchange hours.

BTC – far from “digital gold” – is acting more like a risk-on asset.

Gold continues to act like a hedge against instability, while Bitcoin continues to thrive in a risk-on environment.

As Mish Schneider explains in her Weekly Market Outlook, gold’s move above $2,400 to new all-time highs has been spectacular. This price action Monday looks to Mish more like a correction, not necessarily a sign that we’ve rolled over from a top.

Mish also identifies actionable risk levels to trade against – things may have cooled for the moment in the Middle East. But that’s just the Middle East. There’s still the matter of Russia’s invasion of Ukraine.

And this is still the Middle East. All that oil still must pass through the Strait of Hormuz. Things could flare up at any moment, as Mish cautions.

As for BTC, it dipped into the $59,000s briefly following the fourth halving but recovered and was trading above $66,000 on Monday evening.

This is an asset that Mish likes to trade – “let’s not talk long-term investment” – and she identifies key risk levels here too as well as a near-term target.

After a break above $68,000, “then we turn our sights, of course, to 72,000 to 74,000.”

BTC, Mish notes, like risk assets generally, has been interest-rate-sensitive.

One more reason to look forward to PCE Friday…

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