Foreign, Foreign Foreign foreign. Thank you Foreign Brother. Welcome! Welcome! Welcome to Inflation Day! Welcome back to the Matt Core Show! We are here live to see what the old Stonk Market's gonna bring us today. The Pce report comes out in a mere minute and a half.

I believe something around that line I don't want to miss it I Believe the core CP Core CPA Year over year we're looking at and increase, the expectation is 4.6 while the month of the month is in the realm of 0.3 Once again, that is for the core reading. The major reading: that people are most likely going to be paying attention today for this inflation report. it's going to be a big one. There is going to be some volatility in the market for it, but what's most exciting is we should be able to listen to our boy Rick Centelli.

You know, whenever we have the pleasure, the absolute pleasure of Wreck Rick Speaking Rickety Wreck Wreck, speaking to all of us I'm so excited By the way. You need a dark blue suit jacket. It will look better I appreciate that Monica I have it I have uh I bought a couple now I wore that one because it was actually my lightest one and it was really hot in Manhattan Yesterday um and I wasn't the biggest fan of the undershirts I had to match with the blue I like I could probably show them to you but basically I just bought a couple suit jackets from Barnabas for all those things so we could talk about it in a sec in a second. But I would definitely appreciate your fashion input.

Without a doubt, we are 30 seconds out from this PC report. So here's the name of the game today. we're going to listen to the PC report. We're going to watch the reaction of the market.

We'll go over the levels in the overall market and individual stocks that I care about. Then we'll go through all the major news that'll answer any of your questions. that'll explain that seasonal trade and how it made everyone money that took it and then it's Friday then it's Friday and then it's Friday then it's Friday So I hope everyone's ready I hope everyone's ready for a good old time right now. Despise at 4 15, 47 And with that being said, let's see what they say about the Pce report: The Es is right now at 4168 Spies 415, 44.

let's get this Inflation report Rick Rick and chat Rick Rick Rick Rick Rick Rick Rick Rick Wreck Expecting a litany, A long list of numbers so viewers listeners on the radio. You want to be very patient here because all of these numbers durable. I'll write them down. Income numbers can be Market Moving Durable Good orders April Preliminary up: 1.1 We're expecting down one percent and last month revised from three two to up 2.8 Still solid.

Yes, down two tens. And if you look at Capital uh. good orders, non-defense X Aircraft a proxy for Capital Spending it is up a whopping 1.4 Much stronger than we are looking for. And in the rear view mirror, we have minus 1.1 That 1.4 is significant.

It's the best level since the end of 21.. And if we look at shipments versus orders shipments, we're up a strong half of one spot. down. a little bit reversing their negative Trends as well.

personal income and spending for April Expected up for 10. Four tens Exactly as expected. Spending better than expected. Up eight tenths.

we're expecting up five tenths. That's the best number since it was up two tenths at the beginning of the year in January. And if we look at all three papers they give money for inflation, it's up half of one percent. A very solid gain.

Following it unchanged and deflate her month over month up four tenths of one percent. Not good. That's a tenth hotter than expected. It's much hotter than the 110 rear view mirror.

It's the hottest level since it was up six tenths in January The high Watermark there was up one percent in June of 22.. Now if we look at year over year, deflator up 4.4 percent. You can see yields moving up on that, can't you? Yes up four point, four percent. following up 4.2 that's the highest level.

A little hotter than expected. Team significant drop from its high water mark in June which was up seven percent. Now if we look at the month over month core deflator right there. a little high sense of one little hot team also hotter than the three tenths expected.

and we have to go back to January where it was like coming down on the news. The high water mark in June up 0.63 of course. and if we look at the deflator year over year, it is up 4.7 Another hot one. We're expecting it up 4.6 and the rear view mirror is up 4.6 real quickly.

Wholesale inventories dropped by two tenths of one percent we're expecting on chains real in retail. inventories were up by two tenths exactly as expected. And finally we're starting to see that build a bit. And last and certainly not least, Advanced trade.

uh, balance which of course is a deficit worse than expected. Minus 96 billion we're expecting minus 85. we have made some progress in last months now stands at minus 82, but we are backtracking once again, getting close to Triple digits. You can clearly see we're up at 381.

that's a surprise and the two-year note yield is up on the session as well, but I Do caution that Tens, 20s and 30s are still lower in yield, higher in price than they were yesterday, and there could be a whole lot of curve implications when we restock all of the money that we've been trying to conserve. If the debt scene issue gets resolved, there's going to be issuance. Many think a trillion dollars more of T-bills is going to happen rather quickly. Others say we have to build up those treasury coffers.

look for the entire year we're going to get popping off here. My own feeling is watch for those bills to show up very quickly. Let's see how that figures in. let's go right action.

as we have seen: Bill yields rise up to Historic highs Will that reverse will to your notes on the news Andrew Back to you and I hope you have a good holiday weekend. The same to you Rick thank you for bringing us all of those numbers it's his Memorial Day weekend too. He's got his glasses on, he's looking down. What's uh, what's top of mind sir? Yeah, this is.

um, okay. so I'm gonna start with the good news here. As far as I can I have been able to discern the last uh, four minutes uh Applause uh, a standing oh to Rick for delivering all that data as accurately and intelligently as he does I'll try not to screw that up. Um, so the first thing is, let's look at real consumer spending.

It is better. Uh, that zero eight we did in the zero five reel that's going to add into GDP it's likely to boost. Um, uh uh. forecast for second quarter GDP So this idea of the slowing economy in the second quarter economy is essential to so many forecasts.

Looks like it's eroding away once you reach a certain level for the first month of the quarter. all you got to do is zeros for the rest of the quarter at that same rate or that same level and you have a good consumer spending. That's the good news. I Think the bad news is in the inflation numbers.

If you'll remember, this concept from several Fed officials has crept in recently that the progress on inflation is too slow. Well, guess what? We didn't make any progress on inflation when I look at the core Pce number. This is going to increase the chances of a rate hike in midterm. We went the wrong way.

and I want to just get this I Don't have it yet, but maybe they have it in the back back there. This a super core number that we've had before I don't know if it's updated yet I don't record. it is when you take out shelter. my oh there it is.

Well no I don't I don't Shelter's been really really excited you as I'm not coming down at all. Uh, less food and energy so we don't We hasn't quite updated in our system yet. My guess is it probably ticked up so we have this problem and and then um God I Don't know if Rick is still there, but we have this Distortion out there. Bring Rick back from the one level.

the market is probably correct to think of a Federal Reserve by looking a little heavy baby. On the other hand, the numbers that we look at the probabilities we look at have been distorted by the um uh, debt ceiling debate and the move away from the short end of the bills curve. uh uh in the last several weeks. And then as Rick also pointed out the idea that there could be some flood of issuance.

So we're going to be a while till we have a true read on what the market thinks about the FED. But I would say this if the market is thinking more fed this morning in reaction to this data. That's right, it's a correct way. There's our boy uh, with the uh exception being what happens with the tightening of banking credit standards and how much that ends up.

But you have a stronger consumer this morning, a stronger GDP number, and you have more inflation than the FED wants. That's like three strikes and you're out. Just one more thing guys, which is the idea that there's two more pieces of data: the jobs number next week, and the inflation number on the first day of the meeting in June guys real quickly Steve real quickly. Steve This is what I've been bringing up for years and years and years when we always talk about Fed Fund Futures and this magic instrument that gives us these percentages.

It's a trading instrument, It moves, It has highs lows. It's influenced by other short-term instruments because it is just a fancy short-term instrument. and it doesn't mean it isn't accurate. It doesn't mean we should say things like ignore it because it is moving along with a variety of other financial instruments that's sending a message.

The reality is what I Think What we're really trying to say is is that message may be a little overblown now, but for the moment in time, that's what's pricing. and what we expect is those huge influences are going to moderate as quickly as they came when we see a debt ceiling resolved. and and I think that you'll see how those Market forces of T-bills and two-year notes influence Fed Fund trading. But it isn't necessarily a bad thing, that's just what it is.

and we should remember that it moves up and down and it always has a little bit of volatility in it like any other Financial instrument. Okay, Stephen Rick Want to thank? You both. appreciate it I Want to talk more now. I Feel like the new slate of economic data.

We just gotten what it means and could mean from what we get from the FED Join us right now. is that Julia Granados founder and President of Macro Policy Perspectives Casey Mulligan also former Chief Economist for the White House Council of Economic Advisors now an economics professor at the University of Chicago So curious, uh, what you make of of these numbers And also can we throw precious metals? I Think a lot of people are trying to figure out this idea that, uh, there just may be a massive issuance of more treasuries and what that? What that could mean to the marketplace after we get through all this. Julia Yeah, so I mean I think Steve hit the nail on the head. This is data that shows the economy is still pretty resilient.

Uh, the consumering and spending Remains by going down as you'd expect, that's what happens. Inflation that's proving a bit sticky even though it's come down from the highs. and we're sort of stabilizing in terms of the Run rate. but the Run rate's too high.

Um, so for the Fed, this leaves the open question. Overread: one month of ten percent up, two months of weak consumer spending before MC meeting April So you know they bounce around from month to month. Um, the economy is slowing. We saw that re confirmed yesterday with weak gross domestic income.

Uh, but is it enough? And and I think Rick is right to your question on the treasuries. Yeah, the Market's pretty distorted. We've got another hike fully priced by July A lot of Fed speakers have been saying, you know they're not in a hurry. you know, with all the debt ceiling, you know disturbance.

why not take a break in June and then hike in July If the data haven't confirmed the moderation that you need to see, the percentages are absolutely distorted and we're going to get a lot of volatility at the short end. Uh, as the debt ceiling, especially for the gyms resolved and the treasury restores its balances and its cash coffers. Uh, but you know again, we all know that the FED knows that. So I don't think that they're going to make decisions based on distorted readings.

Yep, Uh, Casey where do you land and I I don't know if you saw it Becky You had a great interview with Neil Kashcari earlier this week. Oh, he said it's a pretty interesting thing. It says some pretty interesting things about effectively. what Julia just said.

which is, we're hiking. Do you think it's game over not slowing down the these numbers? Change that view Casey Um, no. I mean I Don't think we have a lot of news there. we are.

We're in a weak economy, a slow growth economy We like Casey or no. The thing we don't know is is it negative or not? But it's weak. We have big human capital problems. Um, that there's actually a chance we'll stop this very high level of government spending That was really about a war on code, but the covert, the enemies receded, and the spending really hasn't And now it seems like a real serious chance that we'll go back to normal spending.

I Think that's going to be good for inflation? Uh, in particular, make it easier for the FED to that was a whole month and not have to worry about all these government securities floating around out there. And Casey let's speak to that. the the the the. The idea of Treasury is you know floating around out there? Do you think that we should be as concerned about it as I think a number of people are what? I these Securities come from when the government spends more than it makes.

Now there are some interesting timing issues I'm not a bond. Trader In terms of the week-to-week changes, you know as there are freezes and unfreezes. but fundamentally, are we going to continue to rack up trillions in debt and are is that going to be something the markets have to absorb? And this is the first time in years we've seen a real series. Is there any arguments you made? That's basically what the Fed's been doing is really actually isn't working and therefore as a tool is the not is the wrong tool and therefore they shouldn't be using it.

Um, insofar as as you just said, and I think we all agree inflation is not coming down as fast as uh I think we had expected or people had wanted a discussion around whether the economy is less interest rate sensitive than it has it for that is that it's to a two and a half percent mortgage. Uh, they're gonna, you know, hold on to those mortgages as long as they can making that big piece of consumer. uh, and residential investment in consumer spending less interest rate sensitive? That's that's a fair point. On the other hand, there's also a discussion around lags and monetary policy.

Whether they're shorter now because markets are very sensitive to Fed forward guidance or whether they're the same as they were in the past. I would say I land on the side, there's still lags coming through and I think the banking turbulence is a perfect illustration of that. Uh, it takes the economy this giant ocean liner of an economy some time to adjust to what is likely a reality of trying to bounce a little cycle, and we see that sort of feed through differences. Same kinds of financing structures? Uh, right.

I'm getting bored by this. Let's talk about what you guys really want to get into the craziness of today: Stock Features Takaya as Wall Street keeps eye on U.S Debt Ceiling talks. That was before the Pce report. Now it's updated.

Stock futures. Nope, they didn't update it. Well, it should say stock futures slightly downtick on a hotter than expected inflation report. I'm sure they'll update that somewhat soon.

So look at all this. all this stuff just came out at 8 30.. So the expectation on durable goods was a drop of 0.8 It actually increased 1.1. Uh, personal income was in line at 0.4 Personal spending that was as uh, no, that doubled.

So personal income was point Four Expected was 0.4 Personal spending was double Point Eight the expected 0.4 the Pce index. This is why the market kind of downticked right here. These four that I've highlighted inflation came in hotter than expected. This is the first time we came in hotter than expected I believe since October but someone might want to fact check me on that one.

Uh, the next thing, just so you know that we're getting today is at 10 A.M A half hour into the trading day, this beautiful Friday TGIF we get to Consumer Sentiment: The expectation is 57.7 So right now if you're looking at things, you're noticing that ever since the report came out, we're going down. we didn't fall that much. In fact, I'm actually we were down about 90 cents right now in terms of the Spy the S P 500. I'm actually surprised we're not down worse because we came in hot and that now is increasing the chances of a Fed fund rate increase in June and basically assuring one between June and July.

If you look at them together here, I could switch over to July right here. July is actually more likely than not that we are now going to have be at 5.25 instead of 5. cumulatively. so, we're in this weird situation where inflation is not coming down as much as we want.

so they're going to increase interest rates and they're going to do that. which is going to put more downward pressure on the economy which don't forget recently almost sent the entire Regional banking sector into a tailspin and just for a little bit of funsies, a little bit of sprinkles on this chaotic Sunday We also have the debt ceiling negotiations which by most accounts are not going the best right now and even if they do resolve it, that's not necessarily like oh okay, time to be bullish and just YOLO into calls because in 2011 when we have kind of similar situation of like heightened Arguments for a debt sailing debacle if you will, they solved it. They agreed, they came to a compromise, but then the compromise had so many spending cuts by the time it was really digested within the market, we sold off another 15 percent. Now obviously for my historian traders in here you can be like well, we also sold off because the S P Ratings agency downgraded U.S sovereign debt.

but remember, Fitch is about to do that this time around so things could get a little dicey here. I Don't want people to think just if we get some sort of solution with the debt ceiling, that means it's time to be like an untethered bowl. No, you very very much want to be diving into the other things going on, including what's the FED saying? What's going on with inflation? What's going on really with the regional banking sector, especially if they do another rate increase in mid-june So there's various things to be paying attention to. Um, not.

Unfortunately, it's not like an easy, like, evident, go bullish, easy, evident, go bearish type of a trade. Speaking of that, I Do want you to know today is slightly leaning bullish from a seasonal perspective. So for today May 26th A beautiful Friday The Bulls have one day this day historically 52 roughly as good as flipping a quarter The Profit factor is 1.49 and over the past two years we've had a clear bullish push. so mostly little bearish, then a little bit more bullish.

that's why I said leaning bush. In reality, it's kind of neutral. The big bullish days from a seasonal perspective were Wednesday and Thursday and that's exactly why on Monday of this week I called out the trade from a seasonal perspective I said hey I really think going long at Market close on Tuesday But really, technically it was market open on Wednesday. But there's a little bit of a discrepancy there between were you trading es on the Futures Market or were you trading SPY But anyway, between Thursday's clothes and Wednesdays open, there was a strong quantitative argument to go along.

and then that was to either hold for two to three days or get out on your first profitable close. So if you took that trade, this is how it would have looked out. Basically, you would have either gotten in in the worst case scenario on the spy at 4 1407 and then you would have got out on clothes yesterday at 4 14 65. granted it was a small gain, but again nonetheless.

Now if you waited for open the way, the strategy, like technically was the open here was 4 1242 and then you would have got out at the first profitable close which was 4 14.65 So if you waited for open on the Spy, you would have had what was it? The open was 4 12 42 and then the close was 4 14.65 so you would have made two dollars. You could have played that in the Spy directly. You could have got call options so there's various ways you could have played it. But yes, the seasonality did play out there.

And then if we look at the Futures Market the Futures Market on Wednesday opened at Uh 4158 and then we ended up closing at 4158.75 So that actually would have been net net which would have ended up forcing you to wait for today. and obviously today's not done yet. So I just want to point out that it technically is already hit in the spy and depending on when you got in on the Es if you got it on close on Tuesday, that was 4159.25 So that was up by a point, so you'd still be swinging it into today and at this point, even with a hot inflation report, you're actually still technically up right now. so you would ideally just be waiting for the close today.

And even if it's profitable or not, the strategy does technically end today. This would be the max hold time. so you get out in one of two scenarios: Max hold time or your first profitable close on. spy that already hit if you're trading it in the Futures Market you're up right now.

but because of the close yesterday, it was like at your level so you'd be forced into holding it to today. But with today, regardless of if you're profitable or if you're not profitable, you would be getting out at close. Just want to clarify it. So thus far, the seasonality trade is playing out pretty nicely.

It could be better, but at least it's not losing money at this moment in time. The Dows break even the S P 500's break, even the NASDAQ slightly green and oil is chilling in the mid 72 uh, yields going up. obviously because we just got a hot inflation report. So beyond the inflation stuff which we already went over the numbers, inflation just came and hot.

The Pce report the personal consumption expenditure report came in higher than expected I believe it's the first time from October This is bearish for the market because it's basically forcing the FED to be more hawkish as in to be more restrictive as in to put more downward pressure on the economy. That's why the market took a hit right here. Surprisingly, it's already bouncing back. I'm looking at the Spy.

The Spy recently went from 4 15 90 all the way down to 414.28 So dropping a dollar sixty. But now we're back to 4 15 25. Which, for those of you who are remembering what happened at the start of this week, that was the Gap fill level 4 15 25. We're once again back to that important level.

so we're going to be paying attention to that. For those of you who were just like dude I just want to care about your levels. what are you watching today I don't really need the like the rundown on all the things impacting it. If you just want the core numbers, I'm watching 4 15 25.

That is very, very important to me. This was a gap fill from a while ago. Basically, we had the Gap fill that was created between Monday May 1st and Tuesday May 2nd. We ended up getting that fill on the 17th.

Then we came back down and cut through it. but obviously it's still acting as a very, very important level. Once again, it was created right here on the left side of your screen. But anyway, we're reacting to it now.

now. If we can hold that, then I'll be watching yesterday's high. It's kind of a less important level, but an important level like. regardless.

so that's the Low 4 16s. And then after that, I'm watching the low from Friday and Monday the 19th and the 22nd. So basically the low 417. So depending on your time frame, if you're a quick short-term day trader, I would be looking at holding 4 15, 25 and then I'd be looking for yesterday's high so roughly a dollar higher if you have a little bit of a longer time frame.

maybe all day. Maybe you do want to swing it, which. I'm not necessarily a fan of that because there is a lot of weekend risk depending on how all these debt negotiations go. But anyway, the next level I'd be watching is 4 17 25..

on the flip side, if we get rejected hard here at this level around 4 15 25. On the downside, I'm watching 413 and some change, Maybe just call it 4 13 75 and below that, I'm watching for 12.75 So these are the major levels on the Spy I'll be watching today. Now the question is beyond the inflation report. What could potentially be impacting it right here.

Debt ceiling. That's the hot talk over the past week or two of what's going on. Allegedly, we're going to start defaulting as a country on June 1st and right now it seems like the Democrats and the Republicans are fighting like cats and dogs. It's absolutely my mind-blowing to me that the argument, the negotiations, the discussions are still taking this long.

This was not an unknown date we knew about June for many, many months and they on both sides decided to just start talking. Now, obviously, each side is going to blame the other side a little bit more for delaying the start of the negotiations, but whatever doesn't really matter. Water Under the Bridge. This is where we are right now.

Debt Ceiling Talks: Enter crunch time as negotiators get closer to a deal so they are getting closer if you believe. McCarthy Last night, he was tweeting out that he's going to stay here all weekend, which ideally is increasing the chance that we can solve this before the actual default. In terms of the actual default, that's kind of tough because it's not like all of our bills come due exactly on June. 1st they're a little bit staggered.

Like yeah, at first we have some social security. we have some veteran payments. Right after that, we have some federal salaries that are due in there. We're actually going to get some corporate tax payments, so that'll be like money going back into the Coffer so it's not.

Don't think of it as like money money. and then June first hits and we're absolutely screwed. It is a little bit staggered, which gives us a little bit of a wiggle room, but you could also argue that doesn't matter because if we go past June 1st there's a very good chance that the US's credit worthiness. Basically, really, these rating agencies they're gonna screw us over and we also deserve it.

We do not deserve AAA rating when our politicians are acting like this and that will clearly have a negative impact. So even though the pure dollars that are due on June 1st isn't as like directly forward as maybe Janet Yellen that Gremlin will have you believe. Understand that? Still, if we get there and we don't have it resolved even now, we're already putting it at risk because it's just an embarrassment that we kind of just don't have our together. Do we like ask yourself like do we even really deserve a triple A rating when this is how we act and we push things this late until like the game to get things solved.

um I Understand why the rating agencies are saying ah, we don't know if we want to keep keep you at AAA so just want to throw that out so everyone can pay attention. Uh, this is the most recent discussion from McCarthy not far away and we understand Kaylee lines in Washington that maybe actually they figured out what they need to talk about and now they've just got to figure out how to actually get on the same page on those issues. Walk us through where we are right now. Yeah guy, you're exactly right.

Congressman Patrick McHenry The house Financial Services Chair was just speaking to reporters. He of course is one of the chief negotiators on the Republican side in these talks saying that there is alignment on what they need to work on, which to me just is a signal that they are areas in which they are still unaligned that they need to try to come together. We know the big one is going to be spending cuts. What the picture looks like for fiscal year 2024.

Republicans Of course, want to spend less next year than they did last year Democrats though are a little bit more reluctant for some of those cuts considering the slice of the pie we're talking about here. If you don't touch defense Social Security all of those mandatory sides of The Ledger It means that smaller slice of the pie that is left over is going to face deeper very quickly. Republicans Know tax increases No increase in debt limit Ceiling constraints on federal spending Democrats Federal spending Address: Separate from debt limit Preserving the Inflation Reduction Act Please remember that this inflation reduction act actually has nothing to do with inflation whatsoever. It's one of the most, uh, misnamed bills laws, agreements in all of the U.S Political history or cuts and Speaker: McCarthy When speaking to reporters, one of the times he spoke to reporters earlier today, he's doing it a lot said that it's very difficult for Democrats to agree to spend less though he says we could get a deal at any time.

we just don't know when that time may be. So Kaylee Talk about contingencies. Um I know that the official line will be there are none, but there has to be some who's talking to who. Well, Treasury Secretary Janet Yellen Did say yesterday that they aren't talking to Big financial institutions about contingency plans, but the headline actually just crossed from The Wall Street Journal that the Treasury Department is dusting off the Playbook they put together in 2011 as to what the department will do should we, uh, go past the X date.

There's been a lot of conversation of course about the idea of delaying some payments, perhaps priority. She's a really fast speaker as just a default by another name, but really, it is. It's all what happens if we do get to the scenario where the treasures are not moving forward, we cannot make a debt payment. This, of course is where the credit rating of the United States person as well we all know I wish I could talk about that place.

the U.S instead of fumble over every word, could be at risk of losing another AAA credit rating if this drama continues for much longer, was that not a shock? I Think we all knew what potentially could. Very impressive. We saw what happened in 2011 where before we even got to the X8 the S P: uh Global ratings agency did downgrade the U.S So I think everybody knew the risk factor was there. The speaker though saying he's not worried about it today, not worried about it not not worried about it.

Um, so the risk here I would argue is more so the rating agency cut from AAA rating opposed to actually defaulting. That's where I think the big issue here is. uh. Speaking of big things, let's talk about a big big loss.

Nvidia's short seller loses 2.3 billion in one day as stock stores. So in case you missed the news yesterday, Nvidia gained almost 25 percent. We closed out the day at 305 and then we ripped as high as 395.. Now if you were paying attention to stream yesterday, you know that I ended up getting into some calls on Nvidia Uh, it was around 305 or maybe 300 when I got in I got the strike price of 315.

I was looking at a recent high and it went up way higher than I expected I completely locked in that position I paid eight dollars or it was the premium was eight for each one. I got out uh 70 at first the second one I got out of 80 and the third one was when Nvidia started to come back down and I got out at 67.25 So overall the average was in the low 70s so not a 10x gain. It wasn't a thousand percent gain but more of like I don't know, it's still a pretty good one. I was still very happy with it and I do have an update on a new Nvidia position so I'll share that in a second.

But overall Nvidia crushed earnings. The the thing that really sent it Sky High was the expectation for Q2 Revenue was set in like the Line in the Sand was at 7 billion and they increased their guidance to 11 billion. They absolutely destroyed. And that means short sellers got absolutely destroyed.

I I You know I always say this to you, but on the surface this looks pretty good. It is very good. Even though I would argue the expectations had come down quite a bit and you know the buy side expectations were higher for next quarter. So on the surface it may feel like a 40 upside to you know what the consensus number was, but it's probably a little lower than that.

look I I Think what it goes to show is data center demand is off the charts. Yeah, and that's what the guidance shows as well. And with a name like to boil this down a little bit more to lame in terms: Nvidia beat on its data center I Guess business Pillar What that actually means is you have all these data centers across the world. Google uses them Amazon uses um Microsoft uses them and for this was basically built out I Believe Actually, it might be in this interview about 60 years ago by IBM and a lot of it.

It's about a trillion dollars worth of data center infrastructure and half of that is because of CPUs central processing units I Believe that's what CPU stands for and they were good and they were great for the time and they were the lead technology for the time. But now with this boom in AI generative AI we need an improved technology that can handle a much more advanced type of computation. So basically the argument is all these data centers have to go from CPUs to Gpus we're going from basically. Now What? this? If you boil it down, it's basically saying Nvidia is about to get a lot of business, the revenue is about to pop.

especially the Hedge. Here is: do you think the AI boom is going to continue? Many people myself included are saying yes, I Do not think this is a flash in the pan moment, the way the Metaverse was, or the way everyone's using blockchain for a second. I Truly believe any industry you can think of is most likely going to be absolutely transformed by AI. To make that possible, we need to update from CPUs to Gpus and Nvidia has the best.

GPU I Mean if you look at it right now, if you look at the market, uh, about 60 of it is from what's referred to as hyperscalers, that's your Google That's your Microsoft That's your Amazon Like when you hear about Microsoft Azure when you hear about um, I guess Google Cloud when you hear about Amazon AWS To pull off the type of computing they're doing, they need Gpus that's 60 and then the other 40 Enterprise So basically people are looking at it. They're doing like back in the napkin math back to the hand on the napkin out of bar math. Whatever type of math you want to do I Don't know. but over the next couple years 2024, 25 26 We're talking about an industry that's most likely gonna prompt revenue of many hundreds of billions of dollars and increase the overall AI sector by true billions of dollars.

And people are looking at it and they're kind of saying well, who's going to get the business and all the signs right now are pointing towards Nvidia Nvidia is going to get the business. It has a dominant market share as being a dedicated chip maker with the gold in technology. I mean Google's making their own and they still go buying videos because Nvidias are the best now. Will this last forever? Absolutely not.

If you look at Google Microsoft Amazon they are not going to want to just always keep buying it. These companies are all about vertical integration. Look exactly what Tesla did look exactly what Apple did. Eventually the business sector is going to grow enough that they're not going to keep.

Just like bringing it in. they have the talent. they have the resources to make their own. so this isn't like a runaway win for NVIDIA but it's still going to be very, very impressive.

Um, so in the short term they and when I say short term I mean the next one, two, three years they're gonna have billions and billions and billions of dollars of Revenue. It would not be that insane over the next couple years to like the revenue expected. Maybe on the year, if if you annualize, it is going to be in the realm of like 30 billion just for the data center. If you fast forward to 2026, I would in no way be surprised if that gets up to 250 billion like we're talking about a serious serious explosion.

there could be a 10x Revenue jump in just this massive wave of AI Now obviously the risk to that is if you think no AI is just a fad. if you think it's a fad. okay, maybe this is something for you to stay away from. but in terms of just like a multi-year growth, I am very very bullish on Nvidia in the short term, What? I buy here? No I wouldn't even though I love Nvidia I've been a fan of it.

the amount of times that I've used that exact terminology with all of you of like Invidia's product like they are the gold standard I love Nvidia I First found out about it in 2017 when I was trying to make my own computer I was working as a software engineer. My co-workers were like yeah, you want to buy these pieces from Nvidia I Remember getting into Nvidia just above 100 and I was angry at myself because I thought I should get in below 100 and that was not only when we're right now at 380 but that was like multiple splits ago. That was back in 2017. so it like if you just held it I mean I think in the past decade it's now with 10 000 I Believe is the metric They literally yesterday just posted the largest single gain Day Ever I Believe Coming in at 195 billion I quote it I could find that number for you Um actually, let's just do it right now because it's fun to look at how big these numbers are.

It's absolutely massive. Where was it? Where was it Right here? 198 billion Nvidia sees record jump in market cap largest single day market cap gains in U.S Stock market History: 198 billion dollars added in one day. That is absolutely crazy. That is jaw-droppingly crazy.

This the we just saw history. This is isn't like oh, it's a crazy gang cool 25 people making money. What? You literally witnessed history yesterday and I just want to like Really? I guess send home here like how impressively cool that is I hope you caught a chunk of it I Really? Really? Do? Um, not as of now Nvidia is actually not a trillion yet. It's on its way to become the ninth trillion dollar company in U.S History: As of yesterday's close, we were at 938 billion, so obviously it has 62 billion more to go, which would probably be in the realm of right around 400.

I Would have to do the math to like figure out the exact number, but will it get there? I Don't know in the short term. I Do think like would I want to be investing right now if we're talking about a multi-year Outlook No I am not a fan of buying at an all-time high I Don't think that's smart, especially when you have a gap all the way down to really the low 300s. And even in the low 300s, it was trading at a P E ratio of 175 when competitors are like around 30 40. it is in the very short term.

It's clearly overvalued, so it depends on what time frame you have. Would I invest at these levels? No. But can you actively trade at these levels? Hell yeah you can. There's a volatile movement, so the upside: there's gonna be volatile movements.

To the downside: So this is still primed for short-term trades, but as a long-term investment I Absolutely love it. I Just don't want to pay this excess premium. In fact, I would still love to invest below 300, but that's a different time frame I Guess argument. So yes I love Nvidia I Wouldn't invest here, but I would more than happily actively trade it.

And let's let this guy finish this because he says some pretty intelligent things. I'm not the most knowledgeable about Nvidia's Automotive sector, but just seeing the way the world's trending, especially if we do go into autonomous vehicles I Think that's a sub sector of Nvidia's business that many people don't discuss. that could end up being absolutely massive for it. and even though its gaming sector came down by a couple billion uh, I believe it was me Kevin who pointed out that the gaming sector has actually bottomed out and if anything were starting to improve from here I then is so focused on it right? They have delivered.

And I think the there is a good reason why they have delivered is because of the robust demand. So I Want to point out so the data Center growth 14 growth. there are other main units. Even though they were a beat, we're down had negative signs in front of them.

What does that tell you? Yeah, so so their focus is right now. Their margins are almost 67. That's disgusting weak. We know that because the PC market has been weak, the smartphone market has been weak.

So it's not surprising that gaming is negative. Yeah, and that's the cyclical nature of their business. I Think what this company has showed is: Data Center is now 60 off their revenue five years back. Yeah, almost less than five percent.

So clearly, uh, I think they've found this kind of smart cooking their technology and the chips can be used and there is a software element. and the auto side is also new which could be huge and that's what justifies you know the premium multiple I Do think when a stock is priced Perfection you have to deliver a beat like this. this is price for Perfection We've been talking a lot about this 100 gain in the first five months of the year. Yeah, it's wild, but it's not a pure play AI stock necessarily.

it's kind of a kind of way around it. Almost. And what's worth mentioning? some of these other trip makers are popping on these: Nvidia results AMD Micron Intel Talk to us about the sector story here. It doesn't feel like this is just AI To your point, it's Automotive as well.

Yeah, and and look, I think the drivers are there I Would say there are risks as well. When you look at the China ban which happened this week, you know it affects pretty much every semi name. So that's why you know that's another risk that needs to be considers. That wasn't the case with Analog Devices this morning.

So it is different and I would say different segments within the chip markets bottom at different times. That has always been the case. What we are seeing right now is Data Center and Automotive continuing to be strong. The consumer side PC smartphones are weak and they will bottom eventually.

But right now I Think because of the diversification aspect Nvidia Numbers look really good. Oh, how do you square this then with one of the broader themes in Asia For example, where Capex for a lot of these semiconductors is something that they're looking at in kind of this post supply chain crisis pre-recessionary period, when does that catch up to some of these bigger names? Yeah, So look for the fabulous companies. They will continue to rely on a Tsmc to make the Capex Investments And that's the beauty of Nvidia's business model. They have 66 gross margins software like gross margins and they don't have to make Capital Access or Dsmcs.

Their net marriages are probably around 50. that's so absurd. To diversify their supply chain Nvidia is relying on Tsmc to kind of move their Fabs out of Taiwan and make the chips elsewhere. They've made a lot of gains in this business that is on the stock and I am curious about that proverbial moat if you will.

here. what sort of protects them from some of their competitors? Finally waking up and realizing that we want a part of this as well And so I don't think the competitive threat is going away because all these this is the hyperscaler part of how the absurd Revenue that they're getting from Google Microsoft and Amazon will most likely not last indefinitely because it's such a growing sector that Google Microsoft and Amazon are going to want a piece of it. So they're going to go the way of Apple and eventually make their own. Remember Intel The daggering Intel's heart was when Apple had a very public breakup with them I think two to three years ago.

At this point for the longest time, all the processing chips that was used in Apple's products were from Intel and then one day Apple said, you know what, we don't think you're hot anymore, we don't want to date you anymore, we want a divorce and they did it and if you look at Intel's performance, ever since then it has been not so. Bueno Most likely I'm not going to say Nvidia is going to go that way just because when they were doing this, Intel wasn't really the best. Nvidia is still clearly the best and that's why even though you have Google making their own, they're still buying in videos because they are the best So Eventually I would see Just like these companies, these hyperscalers these Cloud providing Services bringing things in-house but I Don't think that's going to be happening anytime soon. I Think they still Nvidia is going to have a cash cow from these Mega tech companies probably for a couple years these hyperscalers are investing in making their own chips.

When you think about, you know where that data center demand is coming from. 60 is still hyperscalers your Amazon Microsoft and Google They're buying Nvidia ships and they're also investing in R D to make their own chips. so clearly that is a threat. Tesla did that back in the day when they moved off of Nvidia Apple I Don't think we'll end up using Nvidia so the large players always look for vertical integration I Think that risk always remains.

but then the Enterprise side is sorry to keep up or interrupting, but he said he doesn't think Apple end up using Nvidia. They are because Apple's cloud is provided by I Believe it's Google and AWS or maybe it's Microsoft and AWS. but Apple's iCloud is actually hosted by these other players and those other players using video. so they're not using them directly, but they are using them What he's referring to.

there is like directly in their own products such as the iPhone and the max. They use their own M1 now, which is still actually really impressive product. Yeah, you know it's not just the hyperscalers and that's where Nvidia will continue to do well. Randy The final question on this: AI kind of tale when one of the damp cloths is essentially regulation.

all the warnings against it. Yeah, we don't need that. We don't care. We don't care about regulations here.

Come on, let's move on. Price bubble and AI stocks will wreck rally Economist David Rosenberg predicts you know he might be right. Debt ceiling negotiators close to a deal with IRS funding and Spotlight we got a little bit of breaking news here: Teamady team team Debt ceiling negotiators close to a deal with IRS funding and Spotlight why don't we just cut their funding? How about that? The White House and Congressional negotiators were close, closing in on a compromise agreement to raise the debt ceiling for two years. House Republicans are on track to win some top priorities, including resending some of the 80 billion allocated to IRS by last year's inflation reduction.

Why are we giving them 80 billion? 80 billion? What Were they are hiring like 88 000 new IRS agents? The White House and Congressional negotiators were closing in on a compromise agreement on Friday today this morning to raise the debt ceiling for two years, which is six days ago before the nation faces the grave threat of the debt default. in exchange for voting to raise the debt ceiling. House Republicans would achieve at least two years of their highest priorities. rolling back Baseline federal spending in 2024 on most discretionary programs and resending some of the 80 billion allocated to the IRS as part of the 2022 inflation Reduction act according to two sources with knowledge and they are in cahoots with CNBC The rescinded IRS money would then be used to cover much of the shortfall in domestic funding created by the GOP spending cuts, essentially preserving the programs while technically cutting the overall Top Line figure.

The Pentagon of veterans health benefits would be spared from any cut and see their funding actually increase next year. Once again, the Pentagon and Veterans health benefits would be spared from any cuts and see their funding actually increase next year. So basically taking the money allocated will some of the money allocated for the increase in IRS spending and giving that to make sure that they're not losing it as in veterans aren't losing and in fact, they would be getting more allegedly over the next year. Details were still fluid on Friday morning with two officials calling the IRS funding trade off as a live issue.

Well, I Think any of us as like just a normal person in this country would say yeah. Do it If the argument is, let this all blow up. Obviously that's not a good solution. So the other one is we have an excess amount of money that is currently allocated for the IRS and we're worried about cutting veterans benefits.

But the option here is to take some of the money for IRS and ensure that veterans have benefits and in fact increasing it next year. I Don't think anyone in here would disagree with that. like whatsoever. I Don't I think we're We're cool with that unless I'm misunderstanding it.

Maybe someone in here has a little bit of a a better understanding of the situation. but to my understanding of the Inflation Reduction Act and what's going on in the the Veteran Assistance Health Benefits trade-off I Think this is something that most people would be cool with. like yeah, if that's the concern, take the IRS money 80 billion and give it to our veterans that I I Think most people are going to end up siding with the GOP negotiators on this particular issue. I'm not saying all the issues I'm just saying this particular issue.

and I Also want to let you know that apparently there's been ever since this Pce report came out. Uh, we're seeing an increase Now there's It's more likely than not, there's a 57 chance that we are getting a 25 bips rate hike. Up until today, there was almost an 80 chance that we're gonna pause in June but I guess Barkin and Ballard a little bit of Kashkari um, maybe a little bit of Waller getting their way I shouldn't really say Kashkari he was more of like a fan of pausing. but Bullard Barkin and Waller seemingly getting their way.

Now there's an increased chance more than a 50 chance of getting another rate hike come mid-june so that's gonna get a little bit crazy. Obviously, on the news of a hot Inflation report, we dipped. But now on the news that we might solve this debt negotiation. we're starting to pop, so obviously the market is weighing the whole debt ceiling negotiation slash compromise slash fighting like petulant children more heavily than a hot inflation report.

which is kind of wild because if you rewind for the past half year now the past year now the inflation report was the thing that impacted the market like most vastly. And this is a very, very good lesson of when we see there's always like it. It's so cool to me because the way I think of a market is it very much is like a living organism and it's not as like robotic and mathematically perfect as I wanted to be. And I'm sure as many of you want it to be and this kind of shows that certain moments in time, the inflation report is the only thing that matters at certain points of time.

the Fomc meaning minutes don't matter at all. And now recently, they're actually pretty impactful. And here, the main thing impacting the living organism that is the market clearly is the debt ceiling. and in fact, the drop off from the inflation report has already been fully erased.

How Wild is that? So it's just a a good lesson of the forever changing nature of what really what is the market. And honestly, I think for me personally, that's why it's almost so addictive is because like it's a perpetually changing puzzle that we're attempting to solve and yet it's unsolvable. which I think is probably unhealthy of an addiction to try to like it. Like um, we're almost like programmed to try to solve the puzzle even though we know there's no solution.

But yep, that doesn't stop us from solving It Anyway attempting to solve it. But you know what might help us solve it is AI Maybe one of these days will be a super algorithm that comes out I Highly doubt it. but maybe I Just think there's too many uh variables in this multivariate equation. But anyway, we know that AI is hype right now obviously.

type I Don't think that means that when the bubble pops and I do believe it's gonna pop I don't mean that. think it's gonna go away I think it's too much up right now? then we'll come down to reality and then we'll just start growing in the way that AI is growing. So I think I'm in the middle ground on this. Obviously you have David Rosenberg calling out that he thinks the bubble is going to fully Pop I mean I Think that's a little bit of like a doomsday type of a call out here.

Let's see what he has to say on it. Where's the volume? We're acting? Investors from recession risks Economist David Rosenberg is founder and president of Rosenberg Research David Great to have you Rosenberg It's certainly when you look at this sector, it doesn't feel like we're talking about these companies living in in an economy that is about to go into a recession. An economy that's about to hit hard times. Um, what do you think? I'm just curious.

What do you think the FED thinks about this sort of bubble like action in a sector of the economy? Do you think it makes them think that their job is is not done well? I would say that there's no question I think that we have a a price bubble and uh, you know we had a price bubble with the dot-coms uh, and the internet back in the late 1990s. Uh, but there's the financial bubble. But then there is. You know the real impact on the economy and you could not not argue that the Internet was a game changer for productivity.

So we had a real-time shift in productivity and what that meant for the corporate cost curve in general. Uh, and you had a financial Bubble at the same time and so they can co-exist I Mean if you look at the the six-month chart of the NASDAQ 100, uh, you have to be blind not to see that. Okay, this is actually looks very weird. Uh, and it's way overextended.

But if I find the Fed I'm looking at this as as Paul Truder Jones said uh, you know I think last week on squat box that this is a major productivity accelerator and you're at The Fad Uh, you're thinking okay, this should actually help reduce the corporate cost curve. It should be disinflationary and so it actually from a real economic sense would work towards their any inflation objectives. David It's Tim Thanks for joining us when we look at what interest rates are doing. We haven't heard from Tim Seymour in a hot minute Having more conviction that the FED has more conviction, Staying the course it it certainly adds to your thesis and the thesis that first of all, the cost of financing a lot of these corporates their their earnings profile are changing dramatically and that rates are staying higher for longer.

Talk about how you think that the Fed or maybe you don't but where the FED is truly on their course here? But what that means for equities, especially when so much of the corporate earnings structure is has been tied to zero rates for so long and that equities aren't repricing that well, you know it depends. Uh, you know which index you're looking at, uh, and what sectors you're looking at. So I don't think you can look at, um, the stock market right now or some sort of homogeneous. Okay, so if you added up the three most economic sensitive sectors of the market, you added up the banks, you added up consumer discretionary, and you added up the transports.

Okay, they have the highest torque to GDP. They're down more than 30 percent from the cycle highs. They're actually behaving in the exact same pattern they have going into the past four recessions. You look at the S P 600 of the Russell 2000.

They are still even with the better tone. This year they are still in fundamental bear markets. so you know, look when you have a situation where the S P is basically now 27. Technology and Technology is growth.

which means it's a long duration asset that yes, we'll look through. uh, the gyrations and the right. He's getting a little boring, but I think I could better explain what he's like really getting into right here. Beware of times when tech stocks surge, but overall stocks fall.

Remember when we look at the Spy it's weighted based on the size of these companies. So something such as Apple because it's such a bigger company, it does if Apple's doing really well. If if Apple Microsoft Google meta Netflix are doing really well, there's a chance that the Spy could go up. The cues could go up even though everything else in the market could be coming down because it's weighted accordingly.

But there are tools that you have at your disposal where you can see how things would be going if it if they were all weighted equally. This is noteworthy. The only other times when the tech sector surged over four percent, while overall stocks decline were at the onset on the middle of the tech bust April 2000 and March 2001. Watch for times when the generals lead, but the soldiers don't follow.

Once again, we can have a Green Market we could be going higher. The stock market could be technically positive, but it could be because of the few big players. While a lot of these other players the soldiers versus the general. but the soldiers in this are actually going down and kind of just an interesting way to look at it.

But right here, mapped out in 2000, 2001 and where we are now I've said this before: I'm going to say it again: I am not particularly interested in investing in My Overall the overall Market or long-term Investments until the end of this year I Don't know if I'm right, but I strongly believe that we are going to be in some trouble in terms of the market, at least severely choppley. Waters But really, my thesis is a bearish one until the end of this year. now. Obviously, in the meantime, we're going to be doing active trades to the upside to the downside, but if you're talking to me about when should we, when am I personally going to invest in some of my favorites? I'm looking at the end of this year I'm talking October I'm talking November The end of this year is where I think I'm going to be seeing a legitimate bottom that I'm interested in investing right here I Don't see an advantage to investing why I've been trying more so over the past couple weeks to drive home the concept of risk reward.

If you are investing in something like Nvidia right now in Apple right now, even in Tesla right now, your risk is greatly outweighing your reward. it truly is. Just look at the chart. I Don't see a mathematical argument of why you should be investing.

Right now, the risk reward is not there. Maybe I'm wrong. Maybe everything's fine and we rip from here and then whatever. You have to wait for the next dip to get back in.

But what we're seeing in the short term is still inflation is higher than anyone wants it to be. We see a fed that's been fighting it. they're going to be jacking up interest rates. We have obviously a lot of negative political Discord With this debt ceiling debacle, they might be downgrading the U.S Credit worthiness I Just think the risk, even if the risk were equal to the reward I Don't even like those scenarios I Want the reward to outweigh the risk.

And right now, buy everything. I'm looking at the risk is outweighing the reward. It's opposite. It's negative of what you want it to be.

So for me, this is actually an easy year. Bonds are paying over five percent. folks. If we're talking about long medium-term type of Investments you can get five percent backed by the government and you don't have to.

Do you? just take that money. Now unless you think things are going to be better than five percent and the risks like you have to be I Guess willing? Or you have to be of the mindset that the gains are so much above five percent that it outweighs the risk. Other than that, you just take your five percent from the government. If we're talking a medium to long-term Investments I Don't understand this concept right now of trying to YOLO into these things that are clearly at a massive valuation.

Once again, this is all for longer term type of stuff. If we're talking about like daily weekly, even like a monthly trade, yeah, we're gonna have good months. We're gonna have bad months. Like that's a different discussion, but for the people out there who you're like, yeah, I saved 10 percent of my account to actively trade.

What should I be thinking about for the other 90? What I'm focusing on is unless you think things are worth the risk of the drop here. and as in greatly outweighing five percent. and I keep saying five percent because that's what you can get from bonds right Now to me, in terms of risk reward for most of your money for the long term, For the ease of mindset, take your five percent. It's so, so nice.

good. Hold it, hold it till your expiration, hold it to maturity technically with bonds, and you just sit on that. Active trades once again. I Want to drive this home? That's a completely different game, but I just want to let you know where I'm at on all that.

and I think this is a very interesting chart. Uh, so feel free to check it out, it's at Hobby Costa Uh, so feel free to look at that if you want a little bit more information there. uh AI just driving out how I Don't think it's going anywhere once again long term I Still love Nvidia Wouldn't invest at these levels but I do love it I Think it's going to transform pretty much every sector we can possibly think of I did explain to you how the short sellers blew up by over 2 billion with their Nvidia Well, other people just missed out massively Kathy Wood She was uh, becoming a legend of Wall Street during The Rona period And just because she was crushing it with Tesla she made some really good Tech disruptive call outs and then recently, if you look at the Arc funds, they've been getting their nuts kicked into their pelvis and unfortunately, things are not getting better. Kathy Woods Arc dumped Nvidia stock before the 560 billion dollar surge.

There's a very good chance that her Equity ownership of Nvidia could have really helped out her ETFs But unfortunately she got out right before she said. Chipmaker's valuation was very high in February And it was, and unfortunately it just kept going higher woods from Holes in video across several of its sma