MSFT and NVDA are both $4 trillion companies representing about 15% of the S & P 500’s capitalization. The combined companies are worth about 7.5% of global GDP, amounts that are incomprehensible and tough to rationalize. Is a Minsky Moment now at hand, defined as the point where a crisis occurs after a long period of stability that prevents investors from seeing risk that in hindsight is obvious?
This is not the first time such a question has been asked but all must remember that markets can remain irrational one day longer than one can remain solvent or sane.
There is little to write about yesterday’s data which largely met expectations. Inflation as defined by the PCE is remaining in a well-established narrow range. Tariffs are not yet adding to inflation as widely predicted.
But on the hand Owners Equivalent (OER) or what someone think what one could rent their house for if it was indeed rental, has remained stubbornly high, has not declined as forecasted, and is a major reason as to why inflation is stuck.
Today is the release of July’s unemployment data. As with recent releases, analysts’ employment forecasts have been missed by wide margins. Nonfarm and private sector payrolls are expected to rise by 105k and 100k, respectively, a 4.2% unemployment rate, a 0.3% increase in average hourly earnings, a 34.2 hour work week and a 62.3% labor participation rate (LPR) is forecasted.
How ill the data be interpreted.
After the close both AMZN and AAPL released earnings. As widely discussed, both META and MSFT greatly exceeded estimates, and those shares are up about 50% since the April induced tariff selloff. Wow!
AMZN exceeded expectations but shares are lower by 8% on perhaps the company was priced to perfection as its forward looking statements were disappointing. AAPL is flat even as their report also exceeded forecasts.
Last night the foreign markets were down. London was down 0.52%, Paris down 2.12%, and Frankfurt down 1.79%. China was down 0.37%, Japan down 0.66%, and Hang Seng down 1.07%.
Futures are down about 1% ahead of the jobs data and more tariff angst. The 10-year is off 5/32 to yield 4.40%.
