Monday Takeaways: It’s Make or Break Time for the Markets

Shah Gilani|May 20, 2024

Hello from beautiful Boca Raton, Florida! I’m on the road this week… but I’ve still got the Monday Takeaways for you… plus a fantastic recommendation if you ever find yourself in town.

The biggest story of the week, of course, is Nvidia’s earnings. It’ll be THE make or break moment for the markets.

But behind the scenes… we’re getting a warning from affluent consumers.

Will the markets listen? Or will volatility continue to drop as greed rules?

See what will move markets – and your portfolio – this week in today’s video.

Click on the image below to watch it.

Transcript

Hey, everybody. Shah Gilani coming to you from beautiful Boca Raton, Florida, with your Monday Takeaways.

So one thing to take away from Boca Raton is a fabulous place called the Meat Market. It’s a steakhouse. Definitely an ode to everything, it is beautiful in every which way.

So if you’re ever in Boca Raton, the Meat Market is a place you want to go. It’s a meat market… because it’s a steakhouse. It’s beautiful.

That being said, takeaways. So what am I taking away from last week? What should you take away?

Oh, how about CPI? You know, it’s okay. It’s okay. PPI, not so okay.

The takeaway is the market didn’t care. Market’s like, let’s make a new high. Let’s, Mr. Market said, go higher. Higher for longer. Doesn’t matter.

Rates might be higher for longer if we don’t really defeat inflation.

The market wants to rally, and we saw that in Walmart (WMT), which had decent numbers. And what was interesting in terms of the consumer from what Walmart said was that they’re seeing more affluent customers shopping there.

That doesn’t really bode well, does it? What does it say about consumers getting stretched, including affluent consumers?

I think the consumer’s going to have a little bit of a turnaround in the second half and maybe struggle. They haven’t yet. They have hung in there, but that may be coming.

The takeaway from that is watch consumers. Watch what they’re doing. We’ve got Target and TJX Companies(TJX) this week. It’s going to be interesting to see how they do earnings wise and what their guidance is, what they’re telling us about consumers – what they’re purchasing and what their spending levels are.

So that’s coming up this week. But the market’s rallying. It’s in rally mode. It wants to go higher.

And I said this last week, and I said it the week before, and I said it the week before that.

The only thing that can interrupt this rally, barring a black swan kind of event, is higher rates. And by higher rates, I’ll repeat it at the cost of sounding repetitive because I am repeating myself… the 10-year’s going to have to get above 4.70% and the 2-year’s going to have to get north of 5% for that kind of a rate backup to slow down this rally.

Could we do that? Sure. We could. That’s $60 billion of 5-years, so we got Treasury issuance coming, coming, coming. It’s never going to stop. And if buyers balk at Treasury auctions, then the rate market could turn around.

So the takeaway there is watch the rate market.

I know. I’m repeating myself because I’ve been saying for a year now, watch the rates market. Rates matter.

Look at the VIX. We’ve gotten below 12. That’s pretty crazy. So the stock market volatility… what volatility?

It’s going in one direction. You know, it doesn’t go up to parabolically. It doesn’t go up in a straight line, but it’s going up and with very little volatility. There’s more a lot more volatility in the bond market.

So watch the bond market. As long as the VIX stays low, your takeaway there is, you got a green light to keep going.

If you’re not comfortable, then just make sure you have stops in there. If things turn around, you’ll get taken out with profits. So what do we have this week?

Oh… we have Nvidia (NVDA) on Wednesday.

Now, Nvidia earnings on Wednesday could be a make or break. If Nvidia does well, if they report better than expected, if they hit it out of the park – again – then the market’s going to continue to go higher because that means it all is good in the AI world, in the chip world, and everything that this whole rally is predicated on, which was really the AI narrative, which kicked it off, is chugging along.

So Nvidia on Wednesday is going to be a kind of make or break. If Nvidia fails to impress, Thursday morning, those futures are going to be down. So keep an eye. Do not lose focus.

Nvidia – and this is not me, it’s a couple of analysts have said, I think even Goldman Sachs – Nvidia is the most important stock in the world.

So there’s your takeaway.

This week, it’s about Nvidia, going to be to a lesser degree about Target and TJX, and, of course, it’s about rates. So that’s what you got to look at this week. Takeaway from all of those things, keep an eye on those things, and go with the flow because the flow is up.

Catch you guys next week. Cheers.