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The Profits Are Fine
Earlier this week, I suggested US equities would have a hard time rising without Nvidia.
That was a rational thing to say. After all, the stock has, at various intervals, been just about the only thing that matters for the "broad" US equity market. Indeed, as one PM-turned Bloomberg blogger pointed out, Nvidia's capable of singlehandedly moving the entire market by 1% or more.
But I was wrong. Wrong to suggest equities couldn't muster gains at the index level absent an assist from Jensen Huang
Note: The first published version of this article was a draft that accidentally pushed into the publication queue. It had some typos. They should be fixed now.
Regardless, things are definitely not as they seem. Or maybe they are. I don’t know…it’s definitely not as “robust” as some market pundits would lead you to believe.
It’s either transaction or devaluation, it seems. The market consensus seems to be fully on the devaluation side as tax increases appear politically difficult.
*It’s either taxation or devaluation
Tax the rich to benefit the poor. A topic that was likely on the table at The Last Supper.
Classical economics tells us that we can offshore menial jobs, import the resulting goods, and sell them to the people who lost those jobs because the gains from that trade will have been redistributed such that everyone is better off. We’re really good at the first two steps, but we’ve completely forgotten the third step. Using a tax on corporate profits to reinvest in folks at the bottom of the income distribution would be a step in the right direction.
Can definitely agree that we probably need to repeal corporate tax cuts, amp up capital gains tax, and raise interest income tax rates.
Problem is, there is no political will to take that money and allocate to social services – seems to just vanish into other spending at this point.
I apologize if I missed this explanation—NVDA was down all day and the Nasdaq rallied into the afternoon—what caused the abrupt turnaround and the negative finish for the day?
That interest payments bit really has to make one wonder, did QT even reach corporations? Regardless,we’re flipping to easing so I guess we’ll figure all that out later. I would think the Fed’s purpose of tightening wasn’t to exclusively impact the lower and middle classes only but it would appear this time around that’s all that they did.