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“What we anticipate seldom occurs, what we least expected generally happens.” – Benjamin Disraeli
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After rallying off the morning lows yesterday, the major averages rallied back near the unchanged line but then drifted lower in the final hour of trading. This morning, equity futures are fractionally higher, while the 10-year yield is unchanged. Crude oil is sharply lower with a decline of 2.7% down to $59 per barrel on reports that the US and Russia may be near an agreement to end the war in Ukraine. Lower oil prices should be a welcome signal for anyone worried about inflation.
In Asia overnight, it was a mixed session with no major index up or down 1%, so maybe we’re starting to see some stabilization following a couple of days of weakness. It was a similar picture in Europe, as the STOXX 600 is up 0.1% and no major country benchmark is up or down 0.5%. Eurozone CPI increased 0.2% m/m in October, which was slightly higher than the 0.1% forecast, but core CPI was right in line with expectations, rising 0.3%.
Tom Petty said, “waiting is the hardest part,” and the market and investors can’t wait for Nvidia (NVDA) earnings after the close in hopes that it will help to get the market rally back on track. While results are widely expected to be good, if not great, the stock’s reaction will say a lot about the market’s posture heading into year-end.
The chart below from yesterday’s Chart of the Day shows the performance of Nasdaq since the launch of ChatGPT, and each red dot indicates days when Nvidia (NVDA) reported earnings. The label between each pair of dots shows how the S&P 500 performed in that span. What’s amazing about the last three years is that in every period between NVDA earnings reports, the Nasdaq has traded higher. That kind of consistency is extremely uncommon and won’t last forever.
Below we show the same chart but have swapped out the Nasdaq for NVDA. While NVDA’s run has been impressive, it hasn’t traded higher between each of its earnings reports over the last three years. It fell 10% from last November to March of this year, and through yesterday’s close, it’s once again on pace for a decline, although a much more modest one than three quarters ago. If there’s one takeaway from the chart, the smooth, seemingly uninterrupted pace of gains since the launch of ChatGPT has ended.
