Minutes, Hours, Years

This entire cycle has certainly taken its sweet old time playing out, especially as it now look like the market is pricing in the possibility of fresh rate hikes as soon as this summer. Even though the odds, courtesy of the CME FedWatch website, are almost at 97% for this coming June FOMC to stand pat under new Fed Chair Kevin Warsh, when we get to the September meeting (first graph, below), the odds of a hike begin to meaningfully rise and could easily go higher yet should the "Iran is transitory!" folks miscalculate inflation's sturdiness, yet again. 

In fact, the Fed Minutes, just released this afternoon, from the FOMC last month as Powell's last one as Fed Chair, showed an increasingly hawkish tone and tenor from the Committee. Beyond that, Stephen Miran, easily the most dovish Fed member pining for cuts at every meeting, stepped down from The Fed as Powell stays on as a governor.

Put another way, The Fed is looking increasingly hawkish (for them) even as Trump appoints "his guy" in Warsh who may or may not be a reformed hawk himself--It is still a committee that votes on rate decisions. 

With that said, I still do not believe equities are anywhere close to pricing in a potential new hiking cycle. Instead, equities are almost daring inflation to call its bluff in the form of a nasty summer of food and energy spikes. 

And AI plays are still in bubble mode, which means practically by definition that they will eschew any and all and and news until the mania snaps off. And that goes double for big, bad, NVIDIA, which reports tonight. 

According to Neil Sethi - @neilksethi - "Reuters sees a 6.5% implied move for NVDA earnings tonight, while Bloomberg sees a 5.5% implied move. In either case, you're talking about around a third of a trillion dollars in market cap. BBG also notes that the stock has fallen following its last three earnings reports."

Neil also posted the second graph, below, of NVDA outperforming the Nasdaq but lagging peers in the semis the calendar year, heretofore, which speaks to the idea of how the other chips like AMD MU SNDK have taken the bubble baton this year. But may also be seen as a negative divergence, especially if NVDA should sell off hard after tonight's report. 

NVDA is in the Dow, S&P, and Nasdaq. And is the largest publicly-traded firm by market cap in the world. The CEO is the epitome of a bubble showman and is likely to put on his rosiest-colored glasses in tonight's report. 

So, as usual, the key issue will be how much longer the market feels like it can play along with an AI cycle that loves to tempt fate more than any cycle in modern history.