Now that was an interesting week.
We had a hot CPI report.
Some big AI earnings reports.
And oh yeah, Nvidia's (NVDA) Jensen Huang was forced out after the disclosure of multiple extramarital affairs. Including one with an alleged Chinese spy.
Yes, Jensen Huang Had to Go
I was wrong about Nvidia (NVDA). I thought they'd find a way to keep Jensen Huang.
But with the benefit of 20/20 hindsight, it's obvious you can't have a reckless casanova running one of the most powerful tech companies on Earth.
Yes, it's very stupid to have relationships with subordinates. Duh. That shows awful judgement.
But let's talk about this potential spy situation. It's been alleged that Alice Huang, one of Jensen's affair partners, may be a spy for China.
And there's two big, big problems with that.
The first is obvious. A spy can steal secrets.
But a spy can also blackmail.
Just one intelligence agent with a hidden camera could collect some very damaging information.
Who knows how much damage could be done? Not only to Nvidia, but to US national security.
We can't be worried about Jensen being compromised.
By the way, I bet there's a wild bull market in private investigation work in the Bay Area right now.
Lumentum Jinxed Us
This headline about optics/photonics leader Lumentum (LITE) still haunts me:
Because where does the next big surprise come from when you're looking at a 3-year sellout?
The biggest challenge with the AI boom is investors fearing "this is as good as it gets."
That's when people stop buying.
So in October, when Lumentum announced they were sold out until 2029, I half-jokingly said to myself "they just jinxed the whole AI trade."
Not long after, Marvell (MRVL) announced it was acquiring Lumentum, tanking both stocks.
Many folks asked an obvious question. If Lumentum is so confident about the future, why would it sell now?
And now I'm wondering if I should chuck my Marvell stock.
Apple May Be the Winner of This Nvidia Mess
Apple (AAPL) has been in a suspiciously smooth uptrend:
I have a theory. Take this with a grain of salt because there are some big "ifs" here, and I'm long Apple.
There is a risk of disruption to the AI spending boom because Nvidia is coming under a lot of scrutiny from the US government. On Thursday, Democrats opened an inquiry related to Nvidia's chip sales to China.
Apple has been aggressively raising prices because of storage and memory prices.
Anything that slows down the pace of AI infrastructure buildouts (like government meddling) could impact storage/memory prices.
If the market believes those prices are coming down, people will start to assume Apple's margins will explode.
In fact, if we see storage and memory prices drop hard, Apple could probably lower product pricing and still boost margins.
Again, there are a lot of "ifs" involved in this theory. Like, if AI falls apart, it could take the whole economy with it.
It's Make or Break Time for AI
Outside of Jensen Huang's flameout, it was a solid week for AI.
We saw strong earnings from CoreWeave (CRWV), Nebius (NBIS), Cisco (CSCO), Applied Materials (AMAT), and Foxconn.
But things are about to get way more interesting.
On Tuesday, Nvidia reports earnings and the market desperately wants to hear 3 things:
1) Demand has not been impacted by Jensen Huang's departure
2) We see no credit problems amid our customer base
3) Trade law was not violated
Because the market is looking for excuses to dump this stock.
Then on Wednesday, AI storage monster and Nvidia partner Everpure (P) reports earnings. We want indications that demand is not slowing.
And then on Thursday, Anthropic (ANT) has its oversubscribed IPO. Odds are it's going to pop. But does it suck capital away from the rest of the market?
We're about to see. Here's the full calendar:
This Market Is Still Short on Joy
The latest AAII Sentiment Survey shows that just 30.8% of investors are bullish.
That's below the long-term average of 37.5%.
And bearish sentiment is at 51.4%, a 2-month high.
Plus, CNN's Fear & Greed Index is at just 38/100, indicating Moderate Fear.
So this market is still short on joyous participants.
Something that should be obvious at this point.
Rate Hike Expectations - Subject to Change, As Always
The next FOMC meeting is December 9, and the market is looking for higher rates, according to the CME's FedWatch Tool.
The market is pricing in a 91.7% chance of a 25 bp rate hike, and an 8.3% chance of a 50 bp hike.
BTW, are you curious about which trading style works for you?
