My investing muse - Nvidia, PCE & Debt ceiling
My investing muse - Nvidia, PCE & Debt ceiling
Nvidia
Nvidia took off and made one of the biggest single one-day gains in recent times following its bullish outlook and earnings. The vibe about AI is real and the potential is great. Yet, I have mixed feelings towards the stock.
The P/E of Nvidia is 222. If I can buy all the stocks of Nvidia right now, it will take me 222 years to recover my investment based on the current EPS. Yahoo Finance stated that its diluted TTM EPS is 1.75
While there is big potential, we should consider investing with a good margin of safety. Personally, I think that I may have missed the window of opportunity for this season.
There is a chance that the price of the stock failing to go down significantly for weeks or longer, I did not buy because I have not researched adequately too. For now, I plan to monitor and will watch from the sidelines. I do not wish to end up being a bagholder for a stock that looks overvalued. Hope is not a strategy.
Debt Ceiling & PCE
It seems that the government is closed on some agreements. President Biden and Speaker McCarthy would need to convince their respective parties to accept the “compromise” before this is finally accepted and signed off. Both sides understand the impact of a debt ceiling default. We will soon see the amount of collateral damages inflicted by this saga. This should see the market responding positively. Thus, the market has brushed aside Friday’s PCE data which could allow the Fed to remain hawkish coming to interest rates.
Conclusion
With the S&P500 challenging the 4,200 price ceiling, it will be interesting to see how the market holds up. Will the ceiling be breached or will there be more rejections? This should unfold in the coming days.
Q1 earnings season is wrapping up and for most, it is a satisfactory earnings. Europe is starting to go under with Germany entering a recession. The shipping industry outlook looks gloomy ~ a good prelude to global product movements & consumption.
While the technicals point to a likely uptrend, there could still be volatility coming from the debt ceiling. Let us exercise caution.
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It is important to note that the impact of the debt ceiling and the PCE price index on the stock market is difficult to predict.
The S&P 500 is trading in an overbought range. The recent price action has been consolidating, with no clear direction.
The debt ceiling and the PCE price index are two important economic indicators.