NVDA was up 15% in the premarket on the back of a 265% increase in 4Q23 rev y/y to $22.1bn. To add strobe lights to the party, net income was up 769% y/y, and guidance for the current quarter came in at $24bn, far above estimates ($21.9bn). Read it here: Reuters.
NVDA’s CEO says that there will be a doubling of the world’s data center installed base over the next 5 years. As companies like AMZN, META, MSFT and GOOG spend furiously to lead, making up 40% of NVDA’s revs, budgets come from somewhere. So, we may see other companies’ budgets shrink as priorities are set.
Intel says it will overtake TSMC in making the fastest chips this year, per Reuters.
US jobless claims are at their lowest level in a month. Even with co’s like Morgan Stanley and Rivian (Bloomberg) cutting staff, labor is strong. Continuing claims were down too. The Fed isn’t cutting rates, folks. FT notes that folks have come off the rate-cut ledge a bit. Expect mortgages to be down again, per Axios.
That’s the reference the Man Group is giving the recent bout of China’s quant funds. They were behind the market by an ave 12% in the 2 weeks ending Feb 8, per Huatai Sec. Because of the gov intervention leading into Lunar New Year, they suffered the “biggest black swan event” according to a manager BBG interviewed. Investors made things worse by trying to get out of the funds. Cue the Chinese regulator. The funds were long small caps and short large caps, which worked last year—but not now. So hedging costs rose, and highly levered funds that were market-neutral had to unwind positions, aggravating the situation. Also, because these funds hold a lot of positions, and a select few were the biggest winners, they continued to underperform the overall market, freaking people out. Chinese officials are expected to make some big policy moves to address economic woes ahead of their annual parliament meeting, per Reuters, so these funds had better retool their algos fast.
There’s an interesting story on BBG about how Canadian banks are using synthetic securitization to offload credit risk to private investors and stay in good graces with regulators and their new requirements. They’ve doubled their use to over $64bn in the last couple of years because it helps them increase their ratios of capital to risk-weighted assets without issuing equity or other instruments. It sounds like they select the riskiest parts of their tranches to sell, and then they don’t have to provision as much for losses. Expect to see this happening in the US as well soon.
Yale is bringing back the SAT, ACT and APs for admissions. Not a key investment story, but it’s a lesson in eliminating metrics in your process.
Per BTIG, today’s median stock in the S&P has the lowest short interest as a % of market cap since the peak of the tech bubble.
