The Week Ahead
In last Friday’s report, I discussed how we are in a period of post-midterm election volatility, which is historically normal.
However, the charged political environment, plus Democrats' outperformance in last week’s midterm election, is adding to the volatility one might expect.
This week, Congress returns, and I will be listening for any statements on data center growth and/or moratoriums.
New rules on AI growth or access to electrical utilities could further last week’s tech sell-off.
But if there are signs of gridlock due to Trump’s veto powers, it could cause buyers to come back, as they may view the sell-off to be overdone.
Outside of politics, the other big event this week is Tuesday’s CPI data.
The general consensus is that the nearly 8% drop in gas prices since the September peak will lower inflation numbers. Sighs of cooling inflation could lower the odds of the Fed raising rates in December.
There are also some Fed speakers this week who may add to or calm the current volatility in the stock market depending on their statements about the economy, inflation, and any potential impacts to GDP due to the changing guard in Congress.
Then there is this:
Nvidia is the 2nd largest company in the S&P 500 index, and its CEO, Jensen Huang, got caught having an affair with a Chinese spy.
Huang has been a leader in this AI growth cycle, and now his board of directors is launching an investigation.
How this will affect NVDA’s share price and Huang’s role at the company remains to be determined, but there could be a lot of volatility as more information comes out/is spun.
After last week’s tech rout, the stock is testing weekly cloud support. A break below the cloud may lead to lower price exploration:
However, if Nvidia can convince the market that this is a non-event and Jensen Huang did nothing wrong, we may see short covering that leads to a rally in tech stocks - potentially kicking off the typical post-midterm rally:
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