Here is the outline for this week’s newsletter! Don’t miss out on what is going on this week!🔥

• Potential Inflation Surprise🎁

• Should you short NVIDIA? 🤔

• $7.6 trillion US debt will mature in the next year.🤯

Potential Inflation Surprise🎁

Inflation concerns in the financial markets have taken center stage in recent months, with several factors causing unease among investors.

The possibility of an unexpected inflation surprise in the fourth quarter has become a growing concern. This has the potential to catch many market participants off guard, given the complacency prevailing among investors and policy makers.

Labor unions, in particular, are playing a significant role in fueling inflationary pressures. The ongoing strike by the United Auto Workers has already sparked fears of rising prices for new and used vehicles.

Furthermore, this strike could embolden other workers to demand higher compensation, leading to broader wage inflation.

Additionally, rebounding medical costs are contributing to the potential inflationary surge in the final quarter of the year. The reversal of pricing for medical care, coupled with persistently high energy prices, is poised to drive up the Consumer Price Index (CPI) figures. It is worth noting that market-based expectations for future price gains have remained relatively stable, despite the recent surge in oil prices. However, inflation traders are now anticipating five consecutive months of 3%+ readings in the annual headline CPI rate.

Financial markets seem ill-prepared to handle a scenario where inflation remains stubbornly high. While some expect inflation to gradually decline towards the Federal Reserve's 2% target, the prevailing economic strength suggests otherwise. Wage growth, in particular, has been resilient and could sow the seeds for future inflationary pressures, even as the Fed hopes for a decline.

Should you short NVIDIA? 🤔

In recent days, there has been a surge in conspiracy theories surrounding Nvidia Corporation, causing concerns among investors who came across these claims on social media.

As your trusted source for reliable market insights, we feel compelled to address these theories and shed light on the truth behind them.

Bernstein analyst, Stacy Rasgon, has taken the initiative to debunk these unfounded claims in his recent note titled "Please don't get your investment thesis from Twitter randos."

With Nvidia's stock experiencing an impressive 222% gain this year, it's not surprising that some dubious theories have emerged attempting to explain this remarkable performance.

One theory asserts that Nvidia's revenue doubled, while the cost of goods sold only increased by a marginal 7%. However, Rasgon clarifies that this is baseless, as Nvidia exceeded Wall Street expectations with its data-center sales and even provided a revenue forecast for the third quarter that surpassed estimates by over $3 billion.

Another allegation suggests that Nvidia used its investment in Coreweave to manipulate its data-center beat for the quarter, implying a misuse of funds and other nefarious intents.

Rasgon firmly states that this theory is also false.

Nvidia's investment in Coreweave occurred after the completion of the quarter, and any notion of channel stuffing is unfounded.

Additionally, Rasgon highlights that Nvidia invests in various AI startups, including:

• Coreweave

• Hugging Face

• Activ Surgical

• AI21 Labs

• Skydio

• Superluminal Medicines

This investment strategy is part of Nvidia's broader vision and commitment to advancing artificial intelligence technology.

As evidenced by Rasgon's thorough analysis, it is clear that these conspiracy theories hold no merit. Nvidia's outstanding performance is a result of its strong sales, surpassing expectations and demonstrating the company's leadership in the market.

$7.6 trillion US debt will mature in the next year.🤯

In a concerning development, approximately $7.6 trillion of interest-bearing US public debt is set to mature within the next year, according to Apollo's chief economist.

This staggering amount represents 31% of all outstanding US government debt and is predicted to exert upward pressure on interest rates.

While not surpassing the levels seen in 2020, when a larger share of debt matured within a year, this latest figure underscores the challenges ahead for the US economy.

Growing Share of Maturing Debt:

An analysis by asset management firm Apollo reveals that the share of US public debt due to mature within a year has been steadily increasing, with current levels nearing those seen during the pandemic.

Currently standing at 31% of all outstanding debt, this represents a substantial $7.6 trillion – the highest value since early 2021. Although still below the peak reached in 2020, when debt maturing within a year accounted for a significantly larger share of the total, the noteworthy sum adds pressure to US interest rates.

Implications for Interest Rates:

The substantial amount of maturing debt is expected to contribute to upward pressure on US rates. This development comes at a time when federal deficits have surged over recent years, significantly elevating the trajectory of US debt.

Furthermore, borrowing costs have climbed due to the Federal Reserve's aggressive tightening campaign, which has increased the government's debt-servicing expenses. As of the latest measurements, the 10-year Treasury yield stands at 4.25%, and the three-month yield is at 5.47%.

Federal Reserve's Quantitative Tightening:

Another factor impacting interest rates is the Federal Reserve's quantitative tightening (QT) program, which has reduced the central bank's bond market participation.

By allowing approximately $1 trillion of its debt holdings to run off its balance sheet, the Fed aimed to curtail inflationary pressures. While this has led to some increase in yields, the overall impact of QT on the market remains limited so far, as the Treasury has continued to find adequate buyers among money market funds and private traders.

Conclusion:

With $7.6 trillion of US government debt set to mature within the next year, the pressure on interest rates is expected to rise. This substantial sum, representing 31% of all outstanding debt, highlights the challenges faced by the US economy.

Against a backdrop of soaring federal deficits, increased borrowing costs, and the impact of the Federal Reserve's quantitative tightening, closely monitoring the trajectory of interest rates will be crucial for investors and financial market participants in the months ahead.

✨Bonus News✨

Disclaimer: This is not any kind of financial advise. This newsletter is solely informational; it does not constitute investment advice, a solicitation to buy or sell any securities, or a recommendation regarding how to manage your money. Be cautious and conduct your own study, please.