A clouded outlook for monetary policy is weighing upon all markets. For about 43 days all were flying almost blind making decisions in a vacuum because of the shutdown. A deluge of data is on the verge of being released but many may be initially skeptical believing the statistics could be dated or clouded.
Little attention has been focused on the rout occurring in Bitcoin. The cyber currency is down over 25% from its apex in early October as it is almost unchanged for the year. The speed and the violence of the decline is incredible.
Some believe a similar rout can occur in the high-flying NASDAQ/AI companies given the unknown amount of leverage in this sector. Some of the largest selling ETFs are quadruple and quintuple levered single stock ETFs focused on names such as TSLA, NVDA and MSFT.
Can a bitcoin rout occur in the above names given the amount of leverage being utilized is believed to be as much leverage that was/is being utilized with Bitcoin?
Wednesday is the release of NVDA’s earnings. Last week Bloomberg opined the market is now more closely correlated to NVDA than to the rest of the S & P 500. Furhtermoe, NVDA is responsible for about 25% of the increase in the S & P 500 during 2025.
Reiterating last week’s comment, perhaps an appropriate statement to make is “how NVDA goes so does the S & P 500 and NASDAQ.”
Trying to put NVDA into perspective, NVDA has declined in value around $500 billion in 15 days. It has added $2 trillion in ten months after adding $1.5 trillion the year before. Almost everyone thinks this is normal and the gains will continue to outpace any declines.
These numbers are insane. It is trillions, an amount hard to fathom. The swing in value is greater than most countries’ GDP. A trillion is 1,000,000,000,000.00. This is nuts.
According to Bloomberg, 41 companies of the S & P 500 are considered tech/AI and is about 49% of the S & P 500’s capitalization. These 41 companies have contributed 71% of the gain in the S & P 500 since November 2022 when ChatGPT was launched. [NVDA is 25% of the S & P 500 2025 gain]. The other 459 companies are 29% of the gain.
Talk about being one sided!
Wednesday could be a volatile day.
Commenting on Friday’s market action, equities led by the technologies, rebounded from an early morning sell off to end nominally higher. Longer dated Treasuries sold off causing a steepening in the yield curve.
Last night the foreign markets were down. London was down 0.24%, Paris down 0.49% and Frankfurt down 0.69%. China was down 0.41%, Japan down 0.10% and Hang Seng down 0.71%.
Futures are flat. Alphabet is up 5.5% as it was disclosed that Berkshire Hathaway has taken a position. The 10-year is up 3/32 to yield 4.12%.
