The smart money will walk away on “sell on the news” déjà vu? Today, I’m predicting that NVDA will indeed beat earnings—surprise, surprise—but don’t get too excited. The rally’s going to be as fleeting as a summer romance, only to fizzle out faster than you can say “profit-taking.”
Let’s break it down: NVDA is set to shine, smashing expectations yet again. But while the market’s lighting up like a Christmas tree for a hot minute, the smart money knows better. Once that earnings headline is splashed across every ticker and news feed, you can bet your bottom dollar that institutional investors will pivot faster than a seasoned trader spotting a “sell on the news” scenario. And who ends up footing the bill? You guessed it—the ever-enthusiastic retail investor, caught in the crossfire of exuberance turned sour.
Adding fuel to this already blazing bonfire is the latest scoop on Microsoft. Yes, MSFT now seems to be suffering from an overcapacity of data centers—a fact that’s bound to chill the collective spine of institutional investors. While NVDA is basking in temporary glory, MSFT is quietly accumulating enough “unused” data center space to make even the most stoic CFO break into a cold sweat. The overcapacity issue isn’t just a numbers game; it’s a subtle signal that some tech giants might be overinvesting in growth areas that aren’t yielding the promised returns, which, naturally, dampens overall market sentiment.
The marquee event to watch
This week is Friday’s Personal Consumption Expenditures (PCE) report. This big number is set to act as the final arbiter of market mood. A weak PCE report could very well nudge the Federal Reserve off the sidelines sooner than anticipated, possibly triggering another market rally. Conversely, if the report isn’t up to snuff, you might just witness another round of “smart money” pivoting to safety while retail investors get burned once again.
So, while NVDA might set the stage for a brief earnings triumph today, history tells us that the momentum in these scenarios is almost always short-lived. As the adage goes: “Buy the rumor, sell the news.” And if you’re counting on that story to play out differently this time—well, you might want to double-check those headlines.
Friday’s PCE report
In summary, enjoy the fireworks from NVDA’s earnings today, but keep your wits about you. The bonds are beckoning, the data center woes of MSFT are looming large, and Friday’s PCE report might just flip the switch on the next market chapter. Cheers to another day of market theatrics! Tell you about it later. It is the stock market superhero.
Oh those bonds (told you weeks ago they were sending a signal)
Oh, look at that—just as I warned you, the smart money has packed up its toys (money) and dashed off to bonds, leaving equities to fend for themselves in the short term. The 10-year
The Treasury yield has nosedived nearly 10 basis points to 4.294%, with the 2-year yield slipping more than 6 basis points to 4.098%. As the economy slows down (yes, I told you this was coming), traders are scrambling to bid up fixed-income prices like it’s the hottest club in town.
And as if that wasn’t enough of a sign, consumer confidence has taken a hit too. The Conference Board’s index fell to 98.3 in February—far below the economists’ wishful estimate of 103.0—and the Philadelphia Fed’s services index plunged to -12.9, its lowest since April 2023. You can practically hear the collective “I told you so” echoing through Wall Street. My voice is loud.
Chris Rupkey of FWDBonds summed it up perfectly: “The economy is about to have the rug pulled out from under it as Washington policies are causing a rapid loss of consumer confidence. The economy is coming in for a crash landing this year. Bet on it. The bond market is.” And guess what? With looming tariffs, a series of shaky economic data, and even federal worker layoffs by DOGE—yes, Elon Musk’s Department of Government Efficiency is at it again—the warning signs are everywhere.
No wonder asset managers like Vanguard are shifting to defensive positioning, advising clients to trim their equity exposure as stocks start to suffer from this capital exodus to bonds. With the Federal Reserve hinting at potential rate cuts soon and markets reeling from policy uncertainty, it’s crystal clear that the short-term pain for equities is the inevitable consequence of smart money’s strategic move into bonds.
So, if you’re still clinging to equities as if nothing’s happening, take a long, hard look at these signals. The shift is already underway—and if you missed the memo, well, I did warn you.
It appears the Trump administration is throwing its weight behind bonds—almost as if stocks are an afterthought. Consider this: while the 10‐year Treasury yield has been tumbling (falling nearly 10 basis points to 4.294%), signaling that investors are feverishly bidding up fixed income prices, tariffs on imports (the so-called “Trump tariffs”) are doing their part to stoke inflation and stymie growth. The focus isn’t on creating a bull market for stocks; instead, the policies seem engineered to push the economy into a “bond-friendly” haven.
Need proof? Reuters reported that consumer confidence plummeted to its lowest level in eight months—98.3—largely because of these very tariffs and aggressive cost-cutting measures like federal worker layoffs by DOGE. Tariffs on key sectors, such as steel and aluminum, have been widely criticized by economists as anti-growth and inflationary, which not only drags down economic momentum but also makes equities less attractive. In other words, while the administration is busy imposing measures that raise costs and curtail spending, bond prices soar as investors seek refuge in the fixed-income arena.
Final thought
Don’t worry; be happy. The stock market superhero might spring into action sooner than most expect. I will talk about him later.