00:00 Josh
We got to start with the Kahuna Nvidia nearing $5 trillion. Josh, do you like magic?
00:06 Brian
Sure do.
00:07 Josh
I got a magic trick for you. I’m going to show you the Wi-Fi interactive. I usually just show you percentage return. There we see Nvidia up 4.98% today, but watch this. This is the market cap of that company, 4.894. It’s about 10 billion away from 5 trillion. And look at Microsoft, over four. Apple is right there. Another record high for Apple today, by the way. In fact, we had four intraday record highs in the Mag 7. So this was really a Mag 7 day. Uh even Alphabet, which closed underwater today, that hit a record high, but really the story has been chip stocks. I’m going to change this back to percentages and just kind of show you what went on in semiconductors today. As I pointed out at the closing bell, you’ve got these three big names solidly in the green, couple others here, but a lot more red than green over here. And so that just kind of leads me to the theme of the day.
00:52 Brian
That’s what I wanted to ask you. Was there a trend, so to speak?
00:55 Josh
Yes. Price action. And the trend is big beats small, big is better than or big is greater than small. And that’s kind of an obvious tautology, but there’s actually some market action that we can uh see it uh playing out in. So, I’m going to show you the S&P 500, the traditional market cap one, which is weighted one, which is in purple here, and you can see it’s up 17% this year. Then we have the equal weighted. That’s where each stock gets one vote. So Nvidia gets as much as, you know, your favorite paint stock. and you can see there’s a big divergence that has emerged here and we have just not seen the broad participation in the market um each one of these days. We’ve seen it some days. Yesterday was a very broad participation uh heavy day, but really over the uh net balance over the last six weeks or so, we’ve seen this widening gulf. And so that just points to the fact that we have a more concentrated market and uh some of the winners, well, they tend to be some of the bigger ones and that’s why you’re seeing the major averages up on a day like today. And meanwhile, you take a look at the Russell 2000, final point in this little segment here. Russell 2000 was down half a percent and so was the S&P 600. So, how you slice it and dice it, I guess, uh, it matters if you’re big, but, uh, you really do wonder what happens if some of those bigger names falter.
02:03 Brian
What about gold? Another down day? Is that party over?
02:05 Josh
Yeah. You know, let me get to the headline first because gold did crack 4,000 and excuse me, I’m not sure what’s happening here. Let’s see if we can get, there we go. Gold cracks 4,000, just like I said. Um we got to take a look at the metal space because gold was reaching all-time highs day after day for weeks on end, and then all of a sudden, all the metal complex just kind of crashed. So, this is what happened today. Let me just show you what happened over the prior month and here, let’s see, palladium still up 12.7%. Let’s start with palladium because this is something that was sky high. Here’s year to date, um and it is down significantly. Now, in the grand scheme of things, you might say, well, that just looks like a blip. But these are heavily leveraged future uh futures contracts and that’s no small potatoes. Here’s gold. Uh you can see this is just just looks like a little blip. So the long-term trend is intact, but there is some concerning stories I’ve heard about central banks not being as heavily invested or wanting to buy as much as they used to. Central banks are the reason that we’ve seen gold surge so much over the last 10 years, since 2015, up 237%. You’ve seen China, you’ve seen Russia, they get the headlines, but you know who the number one buyer of gold last year? It was Poland. And so central banks all around the world have been piling in to de-dollarize. If that trend goes away, well, guess what? That is the biggest marginal buyer. Now, separately, we do have this ETF-induced speculative mania, also people buying the physical, and that’s when you see the shorter-term trend. This right here, this kind of move, that parabolic move, that is not sustainable. We can see that resume, but you have to have the ETF buyers still be interested because some of them are getting burned right now. You have to have the people in the futures who are getting margin calls, they have to buy again. And then the central banks kind of backstopping the whole market, you really need them to participate. The problem is you don’t really get that much news. Central banks buy kind of under the uh under the uh radar, and it takes a long time for their holdings to be reported and generally well known.
04:22 Brian
Speaking of central banks, Fed on deck tomorrow. What’s on your radar? What are you listening for?
04:27 Josh
You know, I’m really uh so I think there’s going to be some interesting things about quantitative tightening and that’s the balance sheet runoff and it’s really in the weeds wonky stuff. I don’t think it matters that much, but what I’m watching is the 13 week T bill yield and why the 13 week instead of the 10 year, whatever? 13 weeks is only a few months, three months, and that’s what really closely ties to the Fed’s preferred benchmark rate. That is the Fed’s fund Fed funds rate. The Fed funds rate is above 4 per uh 4% right now. In fact, they have a target range of 4 to 4.25%. So this is already front running not only a rate cut because that would bring the range down to 3.75 to 4%, but it’s now below that. So rate cuts are getting priced into the actual market here. We’re not even talking about derivatives and the way we usually talk about rate cuts getting priced in. And so my one concern here would be if the Fed is behind the eight ball and we’re seeing these rate cuts because the Fed is trying to catch up and prevent a recession, well, then it’s usually too late. So that’s what the market is dealing with right now. Economy’s kind of on the razor’s edge. and by the way, we don’t really have the data to know how good or bad the labor market is. So this I find, um, not necessarily good news. Fed cuts are not always uh necessarily good news. I guess that’s my my bottom line there.
05:54 Brian
Very clear. Thank you, Brian. Appreciate it.
05:56 Josh
All right.
