Things you need to know
- NVDA strong, just not strong enough.
- A narrative shift is not a breakdown.
- Transports are surging, Industrials are lagging – What to look for?
- PPI at 8:30 – futures weaker.
- Oil up, Gold steady, Bonds up.
- Block SLASHES 40% of workers in favor of AI!
- Try the Greek Style Swordfish
OH boy…..
Markets continue to wrestle with the shifting narratives across Tech and the AI landscape. NVIDIA reported Wednesday, and yes, Jensen did NOT disappoint at all. The knee-jerk reaction was initially higher in the after-hours session, then it settled down, and by yesterday the verdict was clear: strong wasn’t strong enough. As happens almost every reporting cycle, expectations were so elevated that anything short of a complete blowout gets sold. The stock finished down 5.5%, or $10.70, to $184.89. It ended the day sitting just below the trendline – trying so hard to hold on.
But here’s the bigger debate now — and it’s not really about NVDA’s numbers. It’s about why AI disruption is suddenly being treated as a negative for the company building the very infrastructure that powers it. Because THAT makes no sense.
NVDA builds the chips. They power the data centers. They are the backbone of the AI revolution. What’s actually happening has nothing to do with the technology and everything to do with expectations. For two years the story was “AI is infinite, spend whatever it takes.” Now the narrative is shifting to whether hyperscalers pulled forward five years of demand into two. And if that is the case, then someone better rethink the math because when the narrative changes from acceleration to normalization, the Momo crowd panics. Why? Because they took stocks and stretched them – think- Momentum. So, when they want in, they trip over each other and when they want to get out, they scream ‘fire’ in a movie theater!
Let’s be clear – It is the ‘pendulum’ analogy – all over again. It swings too far to the right and then it overcompensates and swings too far to the left.
So, this isn’t about broken fundamentals. It’s about the market trying to decide whether we’re seeing structural slowdown or cyclical digestion inside a secular AI build-out. AI isn’t disappearing. Compute demand isn’t in decline. What’s changing is the narrative — and when the narrative changes, it’s a ‘shoot first/ask questions’ later response.
And while it was tough for some parts of the tech sector – it was not a disaster at all. The Dow was up 17 pts, the S&P lost 37, the Nasdaq gave up 273 pts, the Russell added 14 pts, the Transports added 414 pts, the Equal Weight S&P added 51 pts while the Mag 7 gave up 495 pts.
In terms of sectors – Financials were the day’s winners – the XLF up 1.2%, Industrials +0.6%, Real Estate +0.45%, Energy +0.3%, Communications +0.2%.
We saw weakness in Tech – XLF – 1.4%, Utilities and Healthcare lost 0.3%, Consumer Staples lost 0.2%, Basic Materials – 0.1% with Consumer Discretionary ended flat.
But if you pull the sheets back a bit further oh what you will see! Homebuilders gained 1%, Retail +1.1%, Airlines were up 2.5%, The Value Trade added 0.2%, Metals and Miners added 0.5%, Cybersecurity added 1.8%, Expanded Tech Software rose 2.2%, Aerospace & Defense added 1.1%, Exploration & Production was up 1%, Disruptive Tech – ARKK added 1.5%.
And let’s discuss what the Transports are doing….do you realize that the Transports are up 13.7% ytd? I mean, the S&P is flat, the Nasdaq is down 1.6% and the Dow is up 3%.
So, what is going on with transports – Think Trains, planes and trucks – because it is telling us a much bigger story than maybe you realize. Transports move the ‘physical economy’ – so if they are rallying – what does it mean? It means that no recession, industrial activity is strong, reshoring and infrastructure spending continues, I mean even the AI build-out requires steel, copper, equipment and energy — all of which must be shipped. Add in lower fuel costs – down about 6% from last year – and improved margin visibility, and suddenly earnings expectations look firmer and that means opportunity for investors.
These are not the ‘sexy’ tech names that everyone wants, and my guess is that most of you don’t even know these names, but look what they have done….JBHT + 17%, MRTN + 19%, CVLG + 33%, WERN + 14%, ODFL + 26%, XPO + 51% – and compare this to all those ‘HOT’ tech names that have gotten crushed – PLTR -23%, CRM – 24%, WDAY – 35%, MSFT – 17%, ORCL – 22%, SNOW – 21%.
Under classic Dow Theory, strength in Transports alongside strength in the Industrials – suggests the rally is broader than just mega-cap tech. Chips and code may grab headlines — but trains, trucks and planes tend to reflect what’s really happening underneath the surface. OK, BUT the industrials are not moving at the same pace as the transports, so what does that mean? Well, what it doesn’t mean is imminent collapse. It simply means the signal isn’t clean. When the Transports and the Industrials are not moving in tandem, it suggests something in the economic chain isn’t fully synchronized. That’s not bearish by definition — it just argues against complacency. (this is a KEY theme)
It could mean freight volumes are stabilizing off weak comps — movement is improving without a full manufacturing blowout. It could also mean costs are improving and that is driving transport earnings more than outright volume growth.
In any event, the lack of confirmation doesn’t scream collapse — but it does say proceed with caution, remain disciplined, because confirmation matters. Again, When the Transports and the Industrials aren’t moving in tandem, the message isn’t “panic,” it’s “pay attention.” Add to that the reality that this is a mid-term election year, we’ve just come off three years of outstanding performance, and we’re now watching a recalibration in the very sectors that drove that run — primarily mega-cap tech and AI — and it becomes clear this is more about digestion than destruction. That’s why now, more than ever, portfolios need to be properly balanced — diversified, disciplined, and not overweight in any single sector. This is a moment for smart risk management, not emotional reaction.
Ok – so what’s on the docket today? Producer prices! We have discussed this….
The January PPI report and it is expected to show a decline in price pressures both on the top line and Core – and that is bullish for America! Sit tight – because we are only 2 hrs. away from that report.
Oil is up $1.55, or 2.4%, this morning to $66.75 — and the move is about uncertainty. There’s still no agreement between the U.S. and Iran, and with the weekend approaching traders don’t want to be caught leaning the wrong way if a negative headline hits over the next 48 hours. Add in the fact that OPEC+ is meeting this weekend — with rumors swirling about a possible production increase in April — and you’ve got a classic tug-of-war. Yes, more supply would put pressure on prices, but right now it’s still just a ‘rumor’. And when geopolitical tension rises, markets tend to price risk first and clarity later. In a 50/50 setup, traders hedge the downside risk — and that means higher prices.
Bonds were up yesterday. Both the TLT and TLH added 0.4% and that caused the 10-yr yield to pierce 4% and end at 3.99%. The 30 yr is now yielding 4.64%. And more good news…. Mortgage rates are now below 6% and that is down from 7% 12 months ago – that’s a 14% decline in the cost of a mortgage.
Gold continues to trade right in line…. This morning it is flat at $5180.
Bitcoin is trading at $66k, Ethereum is at $1,960 and Solana is trading at $83.
European markets are mostly flat. Look for inflation reports out of Germany, France and Spain.
US futures are UGLY……Dow futures are -345 pts, S&P’s down 35, Nasdaq down 120 while the Russell is down 25.
The S&P closed at 6,908 – down 37 pts…leaving it once again in between short and intermediate term trendlines…. the Nasdaq is now between intermediate and long term trendlines – the tone is decidedly negative. Concerns are building, but you should not be surprised…. We have been discussing this for months now.
BREAKING NEWS…..MORE FOOD FOR THOUGHT!
Last night, Block, Inc. (XYZ) announced it is cutting roughly 40% of its workforce – about 4,000 jobs — as part of Jack Dorsey’s aggressive push into AI. And to be clear, Dorsey was explicit: this isn’t a distress move. He says the business is strong and that AI has amplified that strength. Investors are loving the news and piling in…. The stock is up 20% in the pre-market.
The story is straightforward. Dorsey told shareholders that ‘AI tools have fundamentally changed what it means to build and run a company’. Translation? Leaner structures, faster execution, lower fixed costs. This isn’t about survival — it’s about optimization and ultimately margin expansion and Wall Street loves margin expansion stories.
And he didn’t stop there – he was very clear in his thoughts…..warning corporate America to ‘get on board’, essentially saying: adapt now or risk being left behind. So, think about this, if AI truly allows companies to operate with structurally fewer people while maintaining – or even accelerating – growth, then the pressure on other CEOs just intensified. This isn’t a cost-cutting story at all…..It’s about the future and the future is now.
So, again, S&P 7000 is not happening today either…. but a retest of trendline support at 6,830 is within sight. Yesterday I said that we’ve tested it four or five times over the past month and held, so it’s clearly a battleground. The bulls have defended it every time, the question now is – will they defend it again? A failure to hold this line, will set us up for a test lower – and that lower is the long term trendline at 6,555…..
And let me remind you of something important — for every seller there is a buyer. Under normal conditions that balance is routine. But when the narrative turns negative and the temperature rises, sellers become anxious. Buyers, on the other hand, are not, because if they were, they wouldn’t step in. Keep that in mind before you make an emotional decision.
Call me at 561-931-0190. Let’s talk about whether the risk in your portfolio actually matches your tolerance — because this works both ways. You may be taking too much risk… or not enough to reach your goals.
Take good care,
[email protected]
Source: Bloomberg, CNBC, Reuters, Wall Street Journal
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Greek Style Swordfish
For this you need: Swordfish, Spinach, Crumbled Feta cheese, butter, s&p, olive oil and fresh lemon juice.
Start with fresh swordfish. Marinate in: Olive oil, S&P, fresh lemon juice – cover with saran wrap and let sit at least 1 hour on the counter. You want it to be room temp when you put it on the grill.
In a separate pan – sauté a bag of fresh spinach in a bit of butter and Olive Oil. Season with s&p. After it wilts down then turn off heat and set aside.
Preheat the grill on high for 10 mins…. When ready – place the swordfish on the grill and sear. Leave for 4 mins or so (depending on thickness) then flip. At this point – cover each filet with sautéed spinach. Add crumbled Feta cheese and close cover. Turn heat to med and leave for an additional 4 / 5 mins until done. The feta will be soft but not melted.
Arrange the swordfish on a warmed serving platter and complement with a mixed green salad. Your favorite chilled white wine is the perfect complement –
Buon Appetito.