Fed and Nvidia Compete for Market Influence at Wall Street Brunch (NASDAQ: NVDA)

Fed and Nvidia Compete for Market Influence at Wall Street Brunch (NASDAQ: NVDA)

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Nvidia’s GTC is now the AI Woodstock. (0:52) The Fed’s new dot-plot will be the big focus. (1:37) Reddit set to start trading. (2:24)

The following is an abridged transcript:

The top stories to look out for this week

Rocky and Apollo. Napoleon and Wellington. Batman and The Joker. You can take a side on which one of this powerful pair is going to jolt the market this week: The Fed or Nvidia (NASDAQ:NVDA).

AI has bested interest rates in the stock market so far, pushing equities to record highs despite a return on cash not seen in more than 15 years.

This week we get Nvidia’s GPU Technology Conference, known as GTC to most and the AI Woodstock to Wall Street. The Federal Open Market Committee will make its decision on Wednesday.

Going chronologically, Wedbush says GTC attendees will be looking for commentary of liquid cooling needs for the powerful architecture and that “one of the struggles for liquid cooling in gaining traction has been a lack of a standard implementation.”

From a stock perspective, Investing Group Leader Livy Investment Research says that “Nvidia is currently trading exactly at where it should be b ased on historical observations” and that “momentum is expected to pick up gradually post-GTC, and more prominently approaching the F1Q25 period-end and on the heels of said earnings release.”

But if Nvidia is Yul Brenner’s Chris, leading the Magnificent 7 against impossible odds, then the Fed is Eli Wallach’s Calvera, the nemesis ready to shoot down high valuations with higher-for-longer raids on equity enthusiasm.

The Fed decision is a fait accompli with trader pricing in a near certainty of now move. But attention has turned to the Summary of Economic Projections, also known as the dot plot, to see if the FOMC has been spooked by the latest hot inflation data.

Carol Schleif, chief investment officer at BMO Family Office says: “The earliest possible cut could be June, though we wouldn’t be shocked to see that delayed to later in the year if the data continues to come in hot as recent data has.”

Wells Fargo’s economists say that “beneath the robust headline figures, we see building evidence that the labor market is cooling and inflation is still slowing on trend.”

They “look for 100 bps of easing in total this year and another 100 bps of easing over the course of 2025 to bring the fed funds target range to 3.25%-3.50% by year-end 2025.”

Reddit (RDDT) headlines the IPO calendar with its much-anticipated debut. The social media company is expected to price 22M shares between $31 and $34 per share, raising up to $748M with the deal.

SA Analyst Mountainside Research is skeptical. They say there “are concerns about their lack of profitability, reliance on advertising. (and) their optimistic valuation,” adding “based on how other recent IPOs have been received by the market, Reddit may have a rocky start.”

Looking to earnings

It’s a loaded end the of the week. Nike (NKE) and FedEx (FDX) report on Thursday.

Seeking Alpha analyst Bela Lakos says from a valuation standpoint, Nike “provides little upside potential at the current levels and “the challenging macroeconomic environment, including the conflict on the Red Sea and its impacts on the Suez Canal traffic, is likely to have a meaningful impact on the upcoming results.”

Hedgeye made a FedEx long call this past week, saying it “will ride the tide of demand and pricing, albeit with some issues around surcharges that can lag.”

Analsyt Jay Van Sciver says: “We expect FY3Q results reported later this month to be the worst of it, with a management team looking for good news likely to chirp about improving industry trends in the spring. Could FDX miss on March 21? Yes, although we don’t see a probable scenario for a meaningful one. Could the shares trade up the next day? This is a risk business.”

Other earnings on tap are Tencent Music on Tuesday, Micron Technology (MU), Signet Jewelers (SIG), General Mills (GIS) and Five Below (FIVE) on Wednesday. And Lululemon (LULU) and Darden Restaurants (DRI) also on Thursday.

Among the top stories of the weekend

Federal officials have launched a probe into Meta Platforms (META) over concerns that the company’s social media platforms are benefiting from the illegal sale of drugs. That’s according to the Wall Street Journal.

As part of a criminal grand jury probe, the U.S. prosecutors in Virginia have been sending subpoenas and seeking responses from the tech giant, the owner of Instagram and Facebook. The officials are investigating whether the company’s social media platforms are enabling and profiting from the illicit sale of drugs. The FDA is also assisting the probe.

And Tesla (TSLA) plans to raise prices for its Model Y midsize electric SUV in both the U.S. and several European countries.

The company said that prices in the U.S. will increase by $1,000 for all Model Y cars on April 1. Tesla (TSLA) followed that up by saying that Model Y prices would rise across a number of countries in Europe on March 22 by about EUR 2K or the equivalent in local currencies. TSLA stock has been hamstrung by recent price cuts and is one of the lowest-peforming stocks in the S&P year to date.

For income investors

Here are some companies that have an ex-dividend date coming next week:

Kohl’s (KSS) has its ex-dividend date on March 19 with a payout date of April 3. Best Buy (BBY) goes es-dividend March 20 with the payout date of April 11 Broadcom (AVGO) has an ex-dividend date on March 20 as well, with its payout date on March 29. And Phillip Morris (PM) goes ex-dividend date on March 20 with a payout date of April 9.

And in the Wall Street Research Corner

Analysts from BofA Securities are out with their small-cap quantitative sector ranks.

Analysts ranked sectors based on estimate revisions, relative valuation compared to history, price momentum and rating changes to gauge investor sentiment.

The analysts said: “We found that the net proportion of upgrades-downgrades in a sector by our analysts is positively correlated with subsequent returns, particularly over the short term.”

Financials (PSCF) ranked first and consumer discretionary (PSCD) second, up from fourth place in January. Consumer discretionary (PSCD), real estate, and materials (PSCM) saw the biggest improvements in ranks, moving from fourth to second, from sixth to fourth, and from seventh to fifth, respectively.

Communication services (PSCU) saw the biggest deterioration, falling to sixth from second. Utilities ranked las again.

And Happy St. Patrick’s Day to our listeners. As the venerable Art Cashin said: watch for the canary in the coal mine.

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