’s guidance today will be crucial. Due to all the call options written on NVDA so market makers can collect option premiums, do not be surprised if the stock does not rally in the wake of its earnings, since sometimes market makers run “mean reversion algorithms” to prevent them from exercising all the call options issued.
Nvidia’s ascension to over $4 trillion in market capitalization has been stunning and swift. Nvidia now has a market capitalization that accounts for 3.6% of global GDP, according to Deutsche Bank. Furthermore, according to Deutsche Bank, Nvidia’s market capitalization is now bigger than the entire stock market capitalizations of Britain, France, and Germany. Only China, India and Japan have stock market capitalizations larger than Nvidia. So, it is very apparent that Nvidia is overpowering the world with its market dominance of AI chips that data centers increasingly demand for all the AI applications.
Meanwhile, prices may not fall as dramatically in the fall as seasonal demand declines due to Russian crude oil disruptions. Russian crude oil exports have fallen by 600,000 barrels per day in the past two weeks due to Ukraine’s attacks on pipelines, refineries, and a major pumping station. Specifically, the Unecha pump station, which is close to Russia’s border with Belarus, was attacked by Ukrainian drones twice in the past couple of weeks.
President Trump’s increase of U.S. import tariffs on goods from India to 50%, due to purchases of Russian oil, is also a factor. Crude oil shipments heading to India have fallen by more than 500,000 barrels a day over the past two months.
There appears to be consumer anxiety in the U.S. as the Conference Board on Tuesday announced that its index declined by 97.4 in August, down from 98.7 in July. The expectations component declined to 74.8 in August, down from 76 in July. When the expectations component is below 80, it typically signals a recession, according to the Conference Board. It is imperative that the Fed cuts key interest rates and continues to cut in the upcoming months to bolster consumer sentiment and avoid a recession.
I should add that German consumers are also moody. Specifically, a published on Wednesday by research groups GfK and the Nuremberg Institute for Market Decisions deteriorated for the third month in a row, falling to -23.6, down 1.9 points from the previous month.
There are growing fears of job losses in Germany as its manufacturing sector struggles to cope with higher electricity prices that make the country less competitive. Germany remains in an economic recession that has persisted for more than two years, and there is no sign of any economic recovery.