It all feels a little flat

According to Nvidia’s CEO, demand is “amazing.” That may be so, but demand for the shares is waning, as the stock fell around 9% in trading after the earnings report. One would suggest that it was a strange phrase for a CEO to use when discussing the outlook for his product. The fall in the share price was attributed to fears that demand had peaked as had margins. Wall Street, led lower by the technology sector, has fallen for five of the last six days. Trump 2, initially greeted with great optimism,  has somewhat waned as the S&P 500 is now lagging behind the rest of the world since Election Day.

Policy uncertainty from the new administration appears to be weighing in on sentiment.  Yesterday’s press release confirmed real GDP growth in Q4 was unrevised at a 2.3% annual rate, matching consensus expectations. That’s rather like looking in the rearview mirror. The Citi economic sentiment index, which compares economic outcomes against expectations, has dropped into negative territory recently. The monthly PMIs indicate a steep deceleration in the pace of economic growth over the past two months from a buoyant rate seen late last year, according to S&P Global, the producers of the survey.

Retail investors are getting nervous. The latest AAII investor sentiment survey recorded that 60% of those surveyed thought the market would be lower in 6 months, and just 19% were positive. That’s about as cautious as I can remember seeing. Some would argue that would be considered a positive contra indicator for markets. Berkshire Hathaway gets nervous when others get greedy, and at present, his cash pile, which to be fair has been steadily increasing over the past few years, now stands at record levels. It all feels a little bit flat.