My Brain Food This Week...
Is inflation being measured correctly, and are central banks addressing it appropriately? NVIDIA is responsible for 34% of the S&P returns, and more!
Here’s what caught my eye:
Inflation in in the U.S. may be higher than originally thought. The current method for calculating the CPI does not include borrowing costs, which means current CPI is heavily understated. Why?
Inflation is an increase in the cost of living from one period to the next (not necessarily what they teach us in school about the cost of a basket). In the U.S. if you include borrowing costs, inflation peaked at 18% vs the stated 9%. This raises 3 questions for me: 1) are the reserve banks operating using inaccurate data, and are we just accepting it? 2) how sure are we that interest rate manipulation is the correct course of action to dampen hot inflation today, because the cause of inflation may be due to increases in transportation costs, lower supply of goods, or increased production costs especially coming out of Covid related disruptions? And 3) is anyone questioning Keynesian economics from a monetary policy perspective and its effectiveness today?
As of last week NVIDIA’s stock returns equated to 34.5% of the returns of the S&P. What’s happening?
NVIDIA has a 90% market share for AI chips and its forecasted revenue continues to beat expectations as orders pile up. Great for NVIDIA, but for me what will be more exciting is watching as more players enter the game to get a piece of NVIDIA’s profits. You know the saying: “your margin is my opportunity”? Well I’m keen to see which companies compete with NVIDIA. Specifically I’m keen to see the growth of Groq, I’m keen to see what Masayoshi Son produces out of Japan. Will Tesla at some point sell specialised chips to the market? Interesting times ahead.
Other reading…
Drought gripping Morocco is bad omen for global food supplies
Confessions from a Petrol Head. I love electric vehicles and it has nothing to do with politics.
Podcasts & Video 🚀
Which piece of content sticks out for you?
Please share your thoughts in the comments 👇🏾