March 22, 2024 | Read Online

This issue is brought to you by:

"We're as close to realizing science fiction as it gets."

- Jensen Huang

Friday Visionary Charts

This was the week that Jensen Huang was officially elevated to the pantheon of tech visionaries.

Huang's unveiling of Nvidia's new Blackwell B200 (with 208 billion transistors) electrified a stadium of tech enthusiasts in a way that only Gates and Jobs have ever done.

Unlike Windows 95 or the iPhone, however, you can't buy one — even if you had a spare $30,000 for the "AI superchip." There are so many buyers ahead of you, you wouldn't even get on the waitlist, let alone anywhere near the top.

The long waitlists and stadium-filling enthusiasm for GPUs is why US equities hit another all-time high this week.

Yes, there was an FOMC meeting, too — and until recently, that's what we'd have been talking about in the Friday Charts. Because for about two years, it has felt like the fate of the world economy was entirely in the hands of Jerome Powell.

Now, it feels like it's in the hands of Jensen Huang, and that all we need from Chair Powell is that he stay out of his way.

Huang is not that important, of course, Nvidia just designs chips (they don't even make them).

It's what we do with them that will really matter, and the news on that front is getting increasingly sci-fi.

This week, the first recipient of a Neuralink brain chip played a game of online chess with just his mind.

We learned as well that robots will soon have brains and that software will soon be creating software, entirely on its own.

And here is the most mind-bending news of the week: The AI song maker suno.ai will make you a song about anything, in any style, in no more time than it takes ChatGPT to answer a question.

More prosaically, there was a lot of evidence from companies reporting this week that AI is making them more efficient and more profitable.

That is, of course, great for markets — so long as macro stuff doesn't get in the way.

So, let's check the charts for potential obstacles — and then end the week on a musical note with the new Friday Charts theme song.

Still on track:

The US has had an uptick in inflation as of late, but big picture, we're still going in the right direction with G-7 inflation back below 3%. The Swiss National Bank even cut rates this week, which seems likely to be the start of a trend.

Disinflation is still inflation:

This chart on food prices from @darioperkins neatly captures why the popular perception of things are more gloomy than the data suggests. Economists love disinflation, but people want deflation. We haven't yet forgotten what everything cost two years ago.

But wages are higher than two years ago, too:

US wages have kept up with inflation and, happily, the lowest wage workers have had the highest wage growth.

Making our own wages:

Americans are optimistic enough that the number of new businesses started in the US has remained elevated. Many of those are likely being enabled by AI, which bodes well for both productivity and growth.

Doing more with less (workers):

Americans are getting better at their jobs, as evidenced by the amount of revenue US businesses are producing per employee. With AI only just getting started, this metric could get much, much better. Sam Altman predicts we'll soon see a $1 billion company that has one employee.

The tech sector is already feeling it:

For all the talk of an AI bubble in booming tech stocks, we should remember that profits are booming too.

Have we seen this movie before?

The comparisons between Nvidia now and Cisco in the dotcom bubble are unavoidable. Usually the precedent is cited as a cautionary tale, but this chart from Tom Lee turns that argument on its head: If this is a bubble, it might just be getting started.

Priced in?

Economist Ed Yardeni, who was bullish before it was popular, noted this week that he now has a lot of company: "Almost everybody is bullish." Exchange data on the positioning of small speculators suggests the market may be getting a little ahead of itself.

But maybe only a little.

In his presentation this week, Jensen Huang predicted that we're on the cusp of a "new industrial revolution."

If so, risk-assets could go a lot higher.

More excitingly, we could get a lot closer to realizing science fiction in the process.

Have a great weekend, visionary readers.

― Byron Gilliam

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Daily Insights

Jurrien Timmer @TimmerFidelity

While the market cycle has evolved from bear in 2022 to bull in 2023, an important question remains: what inning are we in for the secular bull market that (in my view) began in 2009? My guess is that we are in the 7th or 8th inning.🧵