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Morning Market Report: Jan. 30th, 2024

Today is FOMC meeting day one.

The stock of the day is Super Micro Computer.

The new Nvidia we are to believe.

As a reminder, today after the close, Microsoft and Google report.

In addition to Microsoft and Google, semiconductor bellwether and AI darling AMD reports after the close. The stock is up 100% since their last earnings report (see below). One day after Ed Yardeni predicted a Y2K-like melt-up in Tech stocks could begin to accelerate, JP Morgan put out a note saying that crowding in a handful of mega caps is already near Y2K levels:

"extremely concentrated markets present a clear and present risk to equity markets in 2024"

The story of the day:

It's an article of faith in 2024 that if the Fed cuts interest rates, both the stock market and the housing market will go up while the CPI will continue to come down.

"As interest rates inevitably decline (it's a matter of when not if), we can expect demand to surge"

"The imbalance, with more demand than supply, will lead to further price increases"

FR: During the last cycle, home prices declined when the Fed cut rates, see Housing Bubblicious 2.0. In addition, stock prices declined when the Fed cut rates (see chart below).

In fact the ONLY thing that actually went up was inflation. Below we see that the CPI tripled when the Fed started cutting rates. And the only thing that brought it down was global market crash.

The interesting point in all of this is that I haven't read one article saying that what actually happened last time, is the most likely thing that could happen again. It appears that today's financial media are intentionally memory-challenged when it comes to markets. Because if they weren't they would have to constantly remind people that we've seen this movie before and we didn't like how it ends. And that's not how you gain subscribers.

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