#1043 - Is It Time to Take Profits in Nvidia? with Mish Schneider

0:00Hey, visionaries. Today's episode is brought to you by Polkadot, a leading layer zero blockchain with over 2 ,000 developers. It's a network protocol that allows arbitrary data, not just tokens, to be transferred across blockchains. Listen to what Polkadot creator Gavin Wood tells Raoul about Polkadot's coming jam chain, short for Join Accumulate Machine. So what we're doing is we're turning what used to be the Polkadot relay chain built for a very specific purpose, right, to secure and relay messages between separate blockchain ecosystems. And we're turning that into something much more akin to this like world computer, this like kind of ubiquitous multi-core single-turn virtual machine.

0:45Learn more and join the community now by going to realvision.com slash polkadot.

0:59Is it time to take profits in NVIDIA? Hi, everyone. Welcome to the Real Vision Daily Briefing. I'm Maggie Lake, and with me today is Mish Schneider, Chief Strategist at MarketGage.com. Hi, Mish. It's so good to see you. Nice to see you, too, and what an auspicious day since NVIDIA ruled the roost. Oh, my goodness, it did. But, you know, it's really interesting. So, obviously, another stellar report from NVIDIA. They just keep, you know, racking them up. The stock over 8%, but it wasn't enough to carry the overall market, right? S &P down about three quarters of a percent. Last time I checked, Nasdaq off half a percent.

1:34What did you make of that? Well, what's so interesting is I retweeted, I saw somebody put up one of those heat maps. And the only thing that showed green was NVIDIA, of course. And he captioned it, the magnificent one. And so if you look at what, I mean, obviously it was sort of half joking, but it's definitely got to be the question on anybody's mind who is invested in this market in other areas. And I've got so much to say, so I'm going to try not to get too scattered. But just sticking to that theme, we started out with the Magnificent Seven, and now those have not participated in the way NVIDIA has.

2:15And then we went down to the four because Tesla dropped off, for example. And now if we are down to the one, what does that mean? And I think this is really what has been keeping me awake at night wondering as being responsible for so many people. What do you get to tell people about the economy given this? So I wanted to actually read to you the quote by the CEO of NVIDIA, Wong. He says, the next industrial revolution has begun. One, companies and countries are partnering with NVIDIA to shift the trillion dollar traditional data centers to accelerated computing and build a new type of data center, AI factories, to produce a new commodity, artificial intelligence.

3:02And it's interesting that he called it a commodity. So we'll get back to that. But that's the question. Is that enough? Is the building of these data centers, these AI factories, if you will, going to replace everything that we know, that we grew up with historically, that the market is made up of, and the U.S. economy is made up, and the global economy for that matter. And I think that remains to be seen maybe at some point, if you look at some science fiction movies, and that necessarily does not always have good implications for everybody. So I think in terms of NVIDIA, you know, I think you have to trade it like you would trade anything else.

3:42I was recommending to people stay the course? I didn't know how much upside it was based on its close yesterday. We took profits today. I like doing that. And in terms of the rest of the market, there were signs. And that's what I think we need to talk about. Yeah. So just to close that circle on NVIDIA, because that's the question. I mean, at this point, a lot of people are holding it, whether through choice or just passively, it's in your 401 or your retirement or your investment fund. And a lot of people, as it's continued to march higher, it's the question we keep asking, do we take profits?

4:14How much profit should we take? Because it keeps going up. So if you thought you were being smart taking profits six months ago or a year ago, you missed upside. So it's so hard to know what to do. Is there a formula you use? How do you think about the appropriate amount of profit to take and how much to let continue to run if you think there's more upside? Great question. And before I answer that question, so you had Druckenmiller sold out all his NVIDIA Yeah. And he bought the Russell 2000. So he may not be very happy today. Whereas you have Nancy Pelosi. She's still in it. She has not taken any profit.

4:48And I think she's up something like$250 million after her initial investment. But the way we look at it is this. You know, we had taken profits in NVIDIA before. And markets correct. They always correct. There is no such thing as a straight up missile that doesn't eventually run out of some gas, whether it's just from the normal level of profit taking or some external factor that impacts it, maybe something to do with China and chip control, et cetera, et cetera. We don't know. But what we do know is that ultimately everything corrects. Now, it may not make a massive correction like in, well, they're splitting, which of course is going to be a great thing because it'll make it affordable to people.

5:30But that doesn't mean it won't necessarily correct. We saw Tesla split and it took a long time before it moved up after the split. And now, of course, Tesla's still been way down this year. So I think you have to look at it. That's how you have to look at it is you have to not think greedily. You have to think that this is something you want to be in for the rest of your life. And I mean, the markets, not necessarily one particular stock. In terms of dividends, they're cutting the dividends. They raise the dividend, but once it splits, you're going to get a penny dividend. So it's not like a really great dividend hold.

6:05So I would say, take your profits, keep a tail. And if you get a decent size correction, there'll be an opportunity, there always is, to get back in. Yeah. And especially if you're getting that stock split, you can get back in at that split price. So you don't have to sort of pony up for the... So that's awesome. And resisting the greed and trying to call the top is so tricky. And we all get sucked into it and we've really got to take a step back and look at it. So let's look a little bit about small caps for a second, because you're right. I mean, they have not been performing well. They didn't do great today.

6:42Should we look at that and say, well, because they're lagging, that's where the opportunity is? How are you thinking about that? How are you thinking about that? Right. So, you know, semiconductors is the sister semiconductors of my family. So, you know, she's rocking and rolling. And we've been in this place in history before, by the way, many times, actually, even since we've been talking with each other over the last few years, where semiconductors runs, runs, runs, runs, runs. And somebody in the family is flashing a warning. Now, I wouldn't say it's necessarily the small caps, but they have not participated.

7:18And that spread between SMH and IWM is widened again historically. But in the meanwhile, what we do have to look at is what person, I love when I actually humanize them, what sector in the family has really been flashing warning, warning, warning, and what does that mean? And that would be transportation. So the transportation, and I know I brought that chart. You do. This is a weekly chart. So while we've had this run, even the run in the Dow up to 40 ,000 and the S &P going to new all-time highs, obviously NASDAQ going to new all-time highs, even the Russells trying to at least get up to the 2024 highs, the transportation has been closing red every day.

8:02And I've been obsessing on that. What does that mean? And so it really gets back to our first question, which is, can AI control everything and run the whole economy? And essentially, interest rates, this is where that comes into play, I think. So the companies that cannot last with these level of interest rates and now are really starting to feel the pressure with the higher for longer is part of the reason why we're starting to see areas of the economy really begin to contract. And clearly the transportation sector, which is worrisome to me because that is 6 % of the GDP. It's a huge job creator.

8:44And as far as I know, AI can't deliver you food or furniture or most of the things that you need, at least not at this point. And so what is that telling you is that not only now are freight rates going up, but the whole sector is contracting. A lot of those companies like UNP have gone really straight down. And then on top of that, we have the service sector showing inflation. So this whole interest rate thing hasn't really sorted out yet. And I think that's what transportation is telling you, is that either we're getting more stagflationary or we may kibosh inflation altogether by going more recessionary.

9:26and we don't know that yet. I don't think any, I mean, I've seen lots of predictions, but still, I don't think the Fed's going to do very much unless they see the services area of inflation start to come down. And even though used car prices are down, insurance prices in cars are way up. And that's kind of the disjointed situation that we have going on, which makes it very difficult for most people to afford to live, number one. And number two, it makes it very difficult to understand where to invest. I mean, you can't have every single person in the world who's investing in NVIDIA and think that that's going to be a long term winning formula.

10:03Hey, everyone, we're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing. Have you ever wanted to trade Bitcoin but haven't dared try? With Plus500 Futures, you can trade crypto without the hassle of opening a wallet. With just a few clicks, you can register and start practicing with their free and unlimited demo. See a trading opportunity? You'll be able to trade it in just two clicks. Feel ready? You can move to real money with as little as$100 once your account is approved. And the great thing is that in addition to crypto, Plus500 gives you access to a wide range of instruments.

10:39S &P 500, NASDAQ, gas, and much more. Explore equity indices, energy, metals, Forex, and beyond. With a simple and intuitive platform, you could trade anytime, anywhere. Experience the fast, accessible futures trading you've been waiting for with Plus500. With over 20 years of experience, Plus500 is your gateway to the markets. Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus500, it's trading with a plus.

11:15yeah that then and and christopher just pointing out in the chat that nvidia sucked the air out of the room and that's a great way to put it christopher because it does feel like that and you're right about insurance not to mention home insurance business insurance i mean if you talk to anybody who's a small business owner in florida look out i know someone down there and it's outrageous, like tripled, the insurance tripled, hard to keep going. And when you see the extreme weather that's creating some of these issues, I mean, there is a bit of an insurance crisis going on. So there are all of these costs, you're right, that are just headwinds, especially for some of those smaller companies.

11:52So you sent a chart over economic versus inflation surprise index. Walk us through this. Why are you watching this? Well, because what's so interesting is we haven't been in this situation since 2021 when we saw the peak, which is really where you're seeing the level of contraction economically and at the same time, the inflation going higher, regardless of what the CPI is saying. And we know that inflation is very, as disjointed as the market is right now. There are pockets of inflation that, well, aren't really inflationary, actually more disinflationary. And then there are other areas that are remaining very sticky.

12:28So what this really chart I thought was the most interesting about it is this type of spread that you're seeing is showing exactly where we were three years ago when we had a huge correction in the market. And at that point, we had a huge correction in the market. We also had a huge correction in commodities, which is why I brought the next chart to show you. And that is the ratio between equities and commodities, look how it's still historically low. So when people look at something like cocoa prices or oil prices, which haven't really moved very much, or particularly, obviously, the copper prices and the precious metal prices, and they say, oh, they're expensive, compared to where the ratio has been in the past, they haven't really creeped up very much, which is why there are many people that are still calling for some level of that capitulating where commodities go up and the stock market has a massive correction.

13:27I'm not predicting that. I'm just saying that if you put it all together, even with the AI, you have to think commodities because AI doesn't run in a vacuum. It runs based on natural resources. And those natural resources, when they're too cheap, production stops, which makes things, of course, on terms of supply, dicey. And then if demand goes up, then of course, that's where you start to get these big run-ups. And AI is, talk about sucking the air out of the room, it's sucking the water, it's sucking the natural gas, it's sucking electricity. And that's why utilities have done so well in this.

14:07So So this is the case where if it's going to be all AI, what are the implications of that? And then add weather. You mentioned Florida. This is supposed to be a horrific hurricane season. Yeah. On top of all the tornadoes. I mean, the tornado situation is really scary. So commodities, a couple of questions. You have been talking to people about silver for a long time. The last few shows, I certainly know that you're on with me. I know it's been on your radar even before that. And we've seen a big move in silver. We had somebody earlier in this week talking about that as his trade idea. How are you feeling in the commodity complex?

14:45What are you looking at? What do you feel most bullish about? Okay, well, you know, again, I'm a trader, so I'm not a long-term investor. Even if we go into some kind of a super cycle, I'm always going to trade exactly how I mentioned with NVIDIA. I'm always going to, I'll sit for a while if I have a macro view, but I will still take my profits if I get a big payday. And that's why I'm mentioning this because relative to silver, I was long silver when it was down at$22 an ounce and I took no profit until it got to$32 an ounce. And so what I'm saying is, is that now I'm like everybody else waiting to see how far it's going to correct.

15:31I think it closed somewhere about 30 and a half. And it broke out from 30, but one could argue it also broke out from 28. So that's why, you know, charts are so interesting to me because they tell the whole story. And the copper actually started correcting first. It got a little long in the tooth. And by the way, everybody and their mother was talking about silver and gold recently. that always makes me nervous too. I think we've talked about this, right? You know, when I was a commodities trader, when you get in the taxi and he goes, oh, I think you should buy gold. You say, that might be the top.

16:03Now I'm not saying it's a top, but it was definitely an indication time to get out, lock in some money. So where do I see it going? I still think silver has the greatest potential of the precious metals, but that doesn't mean that gold can't go. But gold, remember now has been more of a play to safety with all the geopolitical situation and typical of what happens with us, especially in this country, we tend to get anesthetized to news unless it's constantly coming at us. There was a news story today that Russia is supposedly amassing nuclear test sites on the border of Ukraine. That didn't move the gold market because the dollar moved the gold market and profit-taking moved the gold market.

16:43And the Fed speak yesterday moved the gold market lower and probably just too many longs and loose longs or I should say week longs getting liquidated. So I still think that there's, what I'm really saying is I don't think the fundamentals have changed that much as far as the metals. But I like silver and I have liked silver better in a while now. It's actually been trading a little bit more technically than gold. Gold shot up and came down and I didn't even think it was going to break 2350. I think it closed somewhere around 2340. If it gets to 2350, that tells me maybe that you have a nice little cushion or a place to risk to underneath whatever this low is on this correction.

17:25Same thing with silver. If we hold 30, we get back over 31, you got about a dollar risk. And I think that's how you have to really trade these things. Think strategically about your risk reward, but know that that's probably going to be the better place to be. Just like eventually. I mean, even if we correct in the equities, there'll be great opportunities. I just wouldn't buy the falling knife right now and it could be really starting. Yeah. So I'm sure we have some more granular questions about that, but I just want to make sure we get through some of the big headlines. This has been a really busy week.

17:59And another big development was this shift in Washington, the perceived shift in Washington regarding the approval of an Ethereum ETF, but generally maybe a warmer attitude, less hostile attitude to the crypto industry in general. How are you thinking about ETH here, given that? It still has to play out, but. It does. And actually, there was the story yesterday about the House passed the legislation. Well, two things happened. Well, three things, right? I mean, you just mentioned one. The other two things was the legislature, and it still has to go through the House, past the idea of not having restrictions or at least defining what is the security and what is a cryptocurrency and not having the same restriction.

18:47That's huge. And by the way, I did see another. I love looking at Twitter throughout the day. It consumes me a lot. But I saw Nancy Pelosi was one of the yes votes on that. Just saying. I don't think she's in Coinbase, but nonetheless. I mean, I think the writing's on the wall. I started out and then as firms of Ethereum, I mean, obviously that came off with the market, but not too much. In fact, I was writing down some levels before I came on just so that I could come in with some information. I mean, it broke out of a base of 3 ,200. The high in 2021, 2022 was around 4 ,900. In March, we were at 4 ,100.

19:26So we didn't quite get there. So this is probably a buy opportunity on this correction here. I think that's going to happen. And then the other piece of legislation was that central banks are not allowed to do digital currency. That was passed, by the way, today too. So what this is really doing in spite of or because of the government, who knows, is really setting up the future for not just cryptocurrency and Bitcoin, but for blockchain technology. I wrote a whole article on that yesterday because it's fascinating to me how blockchain technology and a lot of the stocks that are involved with blockchain have not done very well, except for Microsoft, Coinbase, and Block, which used to be called Square, are doing better, but still not nearly as well as our kingpin NVIDIA.

20:18And yet I still think that's the future. Yeah, it's so interesting. And of course you wrote a paper on blockchain, Nish, because you talk about everything. It's absolutely incredible to me every time. We should just take a moment and marvel at that. But you're right. And it's sort of, you know, right now we're very much in the sort of hardware phase, right? But everybody's trying to figure out what that next and the bridge to the mass is. But you're absolutely right, which is why there's so many people working in that space and why we have to make sure we keep ourselves educated about it, which is why I know you've gone down the rabbit hole.

20:48So does it feel like there's, So that's big picture from, as you said, you're a trader. So in a shorter term, does it feel like we're going to continue to see these cryptocurrencies move higher? Is it going to be still going to be volatile? I mean, they still trade as a risk asset, yes, or is that maybe changing? well i thought actually yesterday when oh actually in the last couple of weeks i was starting to get excited about maybe it was separating itself as a risk asset as i started to see transportation and retail which had one little blast up because of the meme stocks oh by the way a little aside note is that the meme stocks were the top of the market in 2021 as well so when that all happened last week.

21:34I'm like, hmm. And then transportation. So when cryptocurrencies were going up, I'm like, yay, they're separating. I want them to, but not just because from a trading perspective, but I guess even though I'm not a Gen Z or Gen Alphabet, the new one, a Gen Alpha, the new one, I'm still rooting for the retail space. I mean, obviously, and a retail rebellion as it's being called by some people. But now we're seeing it was impacted today. So I think it could have just been a reaction. There was a lot of cash inflow on the Ethereum news and the other news that we just talked about. And so some of it came out of the market today because the market got a little spooky.

22:18I think if we can get some stabilization here at 68 ,000, it broke a little bit below it, but not by too much. We can get back there. That's kind of what I'm looking at. Do I think we can go back down to 60? Yeah, maybe. But if we don't break down much more from here, 66, 68, we get back to 68, I'm still optimistic that it might actually separate. My base case theory in December, I wrote this, is that this will be the last hurrah for the metals, however long that lasts. Is it 2025, 2026? But gold and silver are on their last hurrah. They're going to go the way of the baby boomer. They're going to die.

22:57And it's going to turn to cryptocurrencies as the thing to separate itself as a store of value for whatever that means going forward. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

23:18Somebody clipped that and we're going to run it because I love that you are thinking long-term permission, not afraid to voice your opinion and make a prediction. You've been right on so many of them. So we're going to put that one in the vault. You're back in coin. Is that right? I am. Yeah. So when it got down and held around 210, I got in. I mean, it went a little bit against me the next day. So I was one day early. That's so typical of me. And so I kind of sat through it. And then it went up to 237 or eight yesterday. And I'm like, oh, look at me. Yay. And then today it came off. I haven't done anything with the position and closed right around, I think, what, 220.

24:02So, you know, that's still, though, doing relatively well. And with all these headlines that just came out, like I said, just like with Bitcoin, it could have been some liquidation based on some fear. And obviously I won't let it turn into a massive loss or anything like that. I never do that. But I'm willing to give it a little wiggle room because of all of the sweet spots that particular company hit. Plus, plus, I read that it's possible that Coinbase will also be trading gold and oil in the wallet. And I thought, wow, that would be kind of cool. Yeah, that's super interesting. It's like, I'll move in the opposite direction of you, but you know, they're there to serve the customers, I guess.

24:51So Ralph had a question. What do you see for Dixie? US dollar. For Dixie? Yeah. I don't have any real opinion on that. So I don't want to say something that I don't feel very clear about. That's my job here is to be clear. Sure. It's funny. It's been the current the currency situation has been kind of meh, right? It's it's not I mean, you've got certainly a lot a lot of moves in yen, but like for dollar, it's been a little bit sidelined because of some of the other big moves we're seeing elsewhere. What about the dollar is I mean, the whole dollar situation is just range bound. If we break down under one oh four, I get I'll get excited about the idea of inflation picking up.

25:35If it breaks out over one oh five, which it just about did today, then it looks like it's still wants more to the upside. But the upside may be limited. It feels extremely manipulated to me. Let's leave it at that. Hmm. So I wanted to circle back on China. So, by the way, Mish sends like when I say she covers everything, I'm not kidding. She sends an amazing note before the show, all the things like a list of all the things she's watching. And it's endless. So if you want if you want to ask about something, feel free. But we've talked in the past about China. And when we're talking about all those sort of concerns and issues with the U.S.