Hi Multis
It's Sunday evening (or maybe Monday morning if you read this or live in the east or just later) and that means you get a new Overview Of The Week. Every single week. I know that many Multis have rituals around it, which I adore. I know a Multi who always reads it before he goes to sleep on Sunday. Multiple Multis have said they read it with the first coffee on Monday morning.
These kinds of things always make me enthusiastic and make me want to make the best OOTW every week.
Articles In The Past Week
This is the third article this week. Let's look at the two previous ones.
The first one, assessed Cloudflare's quarter, the Quality and Valuation Scores and if Cloudflare is a buy now.
In the second article, Karan used his first-hand experience in banking to put the criticism about Nu's quarter in context. He also analyzed the earnings and I updated the Quality and Valuation Scores. You can read here why the title is The Misunderstood Quarter.
Memes Of The Week
It was a bit calmer this week on our Slack channel. No memes were shared. Although... Maybe, for us stock market nerds, this feels a bit like our own inside joke. :-)
Interesting Podcasts Or Books
I regularly listen to My First Million, a podcast that I have not mentioned before here. It's often more related to business in general or marketing, but this episode is interesting for investors as well.
This is about companies like Shopify, Uber and Airbnb. They refer to this Bill Gurley article about Uber, which I really liked. Gurley reacted against Aswath Damodaran's valuation of Uber.
Gurley's argument? Disrupting companies create new markets, so judging them based on the current market is wrong.
You can listen to this My First Million episode here.
The markets in the past weeks
The market has been on a ferocious run for the last month or so. But this week, it took a breather. The Nasdaq was down 2.47%, the S&P 500 2.61%, and the Russell 2000 3.47%.
The Greed & Fear Index remained in Greed territory, but while it bordered Extreme Greed last week, it's now in the middle of Greed territory.
Macro
If I can, I avoid writing about macro. But sometimes, it's important and with this Trump message, it was again this week.
Remember that the US and Europe had a deal to just charge 10% in tariffs until July 8. Again, Trump shows his unpredictability.
In his Overview Of The Week in Best Anchor Stocks, Leandro had a good comparison.
This resembles the story of “The boy who cried wolf." In this case, Trump is the boy who, instead of crying wolf, cries tariffs. While these threats were at first taken seriously by the market, all the pauses and false threats have made the markets shrug off any news related to this topic.
The only problem is that if the threats eventually become true, the market is unlikely to be prepared for it (just like the wolf ended up coming and nobody was prepared).
Leandro hits the nail on the head here. The problem is not the announcements as such, but when the tariff threats will become a reality.
In Europe's reasoning, the trade deficit is not big. While the US focuses on goods alone, Europe also includes services, where the US is, of course, very strong and there Europe has a quite significant trade deficit. If you balance out both, you are only left with a trade deficit of about $50 billion. That's just 3% of the total trade between the two and a far cry from the 20% that was used on "Liberation Day."
After this new message, the EU said it expects "respect, not threats."
Let's hope both economic powers can work something out fast.
EDIT: Just before I published the OOTW, I saw that Trump had already announced he would delay the tariffs until July 9.
All the unnecessary drama, sigh.
Quick Facts
1. A ton of Money On The Sidelines
I saw this chart on X. It's very interesting and quite counterintuitive. It shows the money in money market funds.
Call it money on the sidelines, if you want. I was quite surprised to see so much money not deployed in the stock market. $7.24 trillion, that's enormous. Many still prefer the safety of a money market fund above investing in the stock market. They miss a ton of upside. Of course, the current interest rates above 4% make this safe choice more interesting.
2. Nvidia Launches Chinese Blackwell
This week, Reuters reported that China will be rolling out the Blackwell AI chip, specifically designed for China. It will be launched in June and have a price point between $6,500 and $8,000. That's cheaper than the H20, which now falls under the restrictions.
To comply with American export controls, it’ll use standard memory, not high-bandwidth memory. That means there will be no advanced TSMC CoWoS packaging too.
This is what Jensen Huang, Nvidia's founder and CEO, said earlier this week about the restrictions and the fact that the H20 can't be sold to China anymore:
We’ve written off — I think it’s $5.5 billion. No company in history has ever written off that much inventory, so this additional ban on Nvidia’s H20 is deeply painful. It’s “enormously costly. Not only am I losing $5.5 billion, we wrote off $5.5 billion, we walked away from $15 billion of sales and probably — what is it? — $3 billion worth of taxes.”