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Nvidia is THE most important earnings call of the season

Aug 21, 2023

Good morning! 👋

This week will be about two things…

A. Can Nvidia put a floor under all the selling; and,

B. Will JPow let it stay or jawbone the markets lower?

There was some reflex buying this morning as computers pounced on what are undeniably oversold levels as I took to the air with the fantastic Stuart Varney on FOX Business this morning. (Watch)

Here’s my playbook.

NVDA is the most important report of the week

If Microsoft rocked AI, NVDA definitely made it possible.

The way I see things, the NVDA earnings call this Wednesday will be the single most important report of the season when it comes to whether or not the rally can resume. I believe that CEO Jensen Huang will hit the street with stronger numbers, stronger guidance, and still-stronger-yet data that highlight the company’s overwhelming leadership. (Read)

MyPOV is that Huang’s commentary will set the tone well into 2024.

Speaking of which, according to CNBC… “The leading AI semiconductor maker gained 2.6% premarket after HSBC reiterated a buy rating and raised its target price. The bank’s new forecast implies more than 80% upside from Friday’s close. Baird also named Nvidia a top pick over the weekend, noting that with AI momentum running at full speed, Nvidia will continue to benefit from higher demand.” (Read)

Whether or not the Fed lets that stick is another matter entirely…

Will JPow jawbone the markets lower?

Fed Chair Jerome “JPow” Powell is due to speak this week from the Jackson Black Hole where he and his central banking buddies are gathered for what is sure to be another round of self-aggrandizing nonsense the rest of the world will have to live with, whether we like it or not. (Read)

My expectation is at least 2 more rate hikes, but that’s not actually what concerns me. It’s the language he uses to explain his thinking and what everybody else has to say about what they think it means that’ll rock markets.

If there’s ever a reminder to stay focused, this is it.

The world’s best CEOs are focused on making money, no matter what. And, I submit, that’s what WE as investors want to be thinking about too.

OBAers… I issued very specific recommendations last Friday, and we’re going to follow up on those in today’s update. Please keep an eye on your email.

Meanwhile, if you’re not a part of the OBA Family and would like to be, I’d be honoured to have you on board. Upgrade to paid

AAPL to standardize charging

Regulators in Europe think this will save people gobs of money—and on the surface, that’s certainly true. I’m all for carrying fewer cords, etc., when I travel, especially if it means my bride and I can pack more on our motorcycles. 😊

According to CNET, “It’s possible the switch to USB-C could result in faster charging and data transfers, specifically on the iPhone 15 Pro and Pro Max.” (Read)

I suspect that’s true, but as usual, the regulators are not really thinking this through.

My guess is that Apple will press forward with an entirely new form of cordless charging that allows Team Cook to maintain its edge, protect quality, and ensure product consistency. I can also see Apple voiding warranties on any devices destroyed by cords, chargers, and power bricks that are not on some sort of “approved list.”

Anybody buying Chinese mystery cords or power supplies, pay attention!

But I digress.

My target is still $225, but I’m starting to think about double that in the next 5 years.

Will Lowe’s pull a Home Depot?

Lowe’s reports tomorrow, and analysts expect $4.49 versus $4.67 a year ago.

I really don’t care, honestly.

I’m more interested in whether or not the company pulls a Home Depot, meaning that, like its competitor, it’ll beat earnings estimates but see sales slide on big-ticket items.

Consumers are still strapped, and as long as that’s true, I think upside remains capped.

What do I mean by “harvesting gains?”

I got a number of great questions following last week’s special on 0DTE Options.

What do I mean when I say, “harvest gains?”

Harvesting gains is an expression meaning that you take some of your winnings off the table the way you’d harvest ripe fruit in an orchard or pocket gains in Las Vegas.

The idea is to capture value while simultaneously helping to reduce risk.

Contrary to what many people think, investing is not an all-or-nothing activity. The world’s most successful investors are constantly taking profits, rebalancing allocations, and systematically selling investments that have reached specific price targets or return goals. Especially when the markets approach what could be major turning points (like last week’s selling).

Conventional wisdom is to let your winners run while limiting losses, but that’s not quite right in today’s computerized world.

My research shows very clearly that you’ve got to take winnings sooner and far more regularly than people think because the risk of loss has changed dramatically with all the computerization, the rise of passive investing, and PFOF (Pay for Order Flow). The 0DTE Options manipulation that I wrote to you about just last Friday has exacerbated the situation.

If you’re scratching your head, I get it.

Wall Street will NOT tell you any of this. The last thing they want on their hands is an educated, savvy, and calm investor who refuses to play the game because it means lower commissions, smaller bonuses, and fewer sheep to lead to the proverbial slaughter.

Just to drive this home and really make my point… I am not aware of a single investor who has ever gone broke taking profits, but stories abound about those who have gone broke taking losses.

Just sayin’…