•Mr.Scott Bessent indicated recently that the HEYDAY Tariff Revenue is on Pace to Do;"Well over a Half Trillion Dollars".He expantiated recently that tariff revenue is on pace to do "well over a half trillion dollars, maybe toward the trillion dollar" mark annually.Remember, even $300 billion reduces the budget deficit by 1 percentage point. At $500 billion that would take the budget deficit down to 3.7%. That's precisely the average budget deficit of the past 50 years.
•For Approximately seven quarters, data center revenue grew at a pace of about $4 billion a quarter - as if it were fixed. And that put Nvidia’s growth rate on a steep downward slope.Apprehently, the backlog of DEMAND for Nvidia's most advanced chips has been insatiable. Every chip Nvidia receives from its manufacturer, Taiwan Semiconductor, is already sold. And yet, back in previous May, they reported the slowest revenue growth since the onset of the AI boom.
•The Fed's stated measure for its 2% inflation target is headline ''PCE'' (not core PCE, not CPI).Previous June’s number was 2.6%, and with July ''CPI'' and ''PPI'' already reported, which little change of 2.6% was initially expected. And Previous July ''PCE'' indicated (change in the personal consumption expenditures index).
•Apprehently, the second reading in Q2 GDP just indicated at annual rate of +3.3%. That's the highest growth in more than two years. And it's above the long-run growth rate of 3.1%.
• It's not 2%. Perhaps it's a long way from the 4.33%,the effective Fed Funds Rate.That differential of roughly 1.7 percentage points between the Fed Funds rate and the inflation rate represents "restriction", downward pressure on the economy.
Remember, there was no growth contribution from "compute" (i.e. GPUs) in the quarter. Rather, ALL of the data center revenue growth came from networking equipment.That said,For several quarters, Taiwan Semiconductor seems to have hit capacity/ a hard ceiling on advanced chip production -- at least in what it's capable of producing for Nvidia.
Declines in the stock have been fairly typical for Nvidia following earnings (exception this past May). And it looks like we're getting another one. With Nvidia representing 8% of the S&P 500, and 10% of the Nasdaq 100, the post-earnings selling will weigh on the big indices. That said,potential stocks coming off from record highs, we get a new record high in gold today, and silver trades to near $41.
The 10 year yield on French government bonds traded near 14-year highs today -- a threat to breakout.And the European Commission has committed them to massive defense and AI spending, to be funded through an even bigger deficit (i.e. more debt).
Which initially happen last time the price of silver was here? It was September of 2011, and 10-year Greek government bond yields were spiking to 26%. Precisely This duration, the French government bond market is the spot to watch. France has debt levels well above 100% of GDP, with stall speed growth, and a 5.8% budget deficit.
MeanWhile,The Federal Circuit court's ruling on Friday that Mr.Trump's tariffs are illegal will be appealed to the Supreme Court. "If the tariff policy were to be unwound, it would be an economic bomb".
The fiscal position and outlook would swing from improving, to severely deteriorating. The monetary policy wouldn't just be too tight, the Fed would be forced back into emergency policy mode, including QE --first to stabilize the bond markets, and then to pump liquidity into the system.
The economy would be in alleged recession.Apprehently the optimistic Datum: The President Trump Administration has options, even if the Supreme Court were to rule against him. A.mong the options, he could declare a national emergency to justify tariffs, framing AI leadership as "in jeopardy" (a national security risk).
He hinted at that during the HeyDayWeek, in responding to a question in a press conference.That said, if we look at the VIX (the market's fear gauge), it's not reflecting any angst in markets -- trading in the bottom decile of the six-month range.The beginning of September is looking a bit like the way this past June started.
At that duration, a few risks to market stability suddenly bubbled up: The Ukraine/Russia peace path was abruptly reversed. The budget glide path was muddied, making the cornerstone tax cut extensions less certain. And the sustainability of the 90-day tariff reprieve with China came into question.
Which stocks didn't have a problem. In fact, the S&P 500 finished up almost 5% in June. The Potential ratio around extreme levels, which has historically associated with extreme moments of safe-haven demand.
And in these previous cases, the gold safe-haven demand leads ,pushing the ratio to extremes. Silver later follows (higher) on both industrial demand (in war time) and relative value (as a safe haven asset).
And in these prior peaks, it's the outsized rise in silver that pushes the ratio back down.Apprehently Gold and Silver continues to be one of the biggest movers of the year across,global stock markets.
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