On Monday, the S&P 500 added almost 0.1%, hovering at record highs and on track to mark its 24th record close this year.
The Nasdaq 100 secured a new record high, ending up 0.6% higher on the back of a tech rally.
Investors are looking for additional hints about the timing of the Fed's interest rate cuts, with several Fed officials scheduled to speak and FOMC minutes being released this week.
Among stocks, Nvidia shares advanced 2.5%, driving the sector higher.
Other chipmakers, including Applied Materials (+3.7%), KLA Corporation (+3.3%), and Micron Technology (+2.9%), also saw gains.
The biggest market event of the month comes on Wednesday - it's Nvidia Q1 earnings.
This will be the first year-over-year comparison to the earnings report and earnings conference call that delivered the "Nvidia moment" - when CEO Jensen Huang shocked the world by declaring "the beginning of a major technology revolution," while forecasting billions of dollars of quarterly revenue growth. Here's a visual of how that forecast has played out …
The trend is clear: Adding billions of dollars of revenue growth each quarter, and beating what has proven to be conservative guidance.
For this most recent quarter, which they will report on Wednesday afternoon, they have guided to do $24 billion in revenue. If they hit it would be a quadrupling of revenue since the fourth quarter of 2023.
We already know, based on the earnings reports from the tech giants of the past two weeks, that Microsoft, Google and Meta (alone) spent north of $32 billion last quarter on investment in computing capacity - they bought as many Nvidia GPUs as Nvidia could supply.
We should expect another "better than guidance" number, and based on the pre-orders of Nvidia's new Blackwell chip, the guidance should continue to rise.
So, we'll head into Nvidia earnings with the stock back near the record highs, having more than tripled since the "Nvidia moment," but also having gotten cheaper along the way. How? Not only have revenues quadrupled over five quarters, but the profitability of each dollar of revenue has doubled over the same period.
Net income margins have doubled over five quarters - that's economies of scale at work and internal efficiencies gained from AI. With that, here's a look at the trajectory of Nvidia's valuation, taking end of reporting quarter price over the annual earnings run rate (end of reporting quarter EPS x 4).
At the current share price, the Wednesday report will probably bump this higher to about 40 times - still cheap for a company growing at a triple-digit year-over-year pace (still).
Now, we have the Dow breaching 40,000. The Nikkei has revisited record highs of three decades ago. Four tech giants have valuations exceeding $2 trillion (Microsoft exceeding $3 trillion). Gold is on record highs. Copper is on record highs.
Are these red flags - signals of over-exuberance or excess speculation?
Neither. It's a continuation of the revaluation of both hard and financial assets relative to fiat money (i.e. it's a continuation of the devaluation of paper money). With that in mind, let's revisit an excerpt from my daily Macro Perspectives note almost four years ago, to the day …
May 21, 2020
“Remember, the intent of policymakers (U.S. and globally), to combat the global economic shutdown, by flooding the world with money, was to ultimately inflate economies and deflate debt.
This was an explicit devaluation of cash against asset prices. And as we've discussed, these policy moves will reset the price of everything (consumer stables, consumer products, services, labor … and also stocks, real estate, commodities … everything).”