The Week in Charts (11/26/24)

View the video of this post here.

Join me for a big year end show with YCharts on December 11 (2pm EST) covering my most important rules on markets and investing and what to expect for 2025.

Register HERE to reserve your spot (if you can’t attend live, sign up to receive a replay).

The most important charts and themes in markets and investing…

1) Nvidia Hardware Is Eating the World

It was another blowout quarter for Nvidia…

• Revenues surged to a record 35.1, up 94% over the prior year (consensus estimate was $33.2 billion). Their revenue projection for Q4 is $37.5 billion, which would be a 70% YoY increase.

• Net Income hit another record high at $19.3 billion. That’s a 109% increase over last year’s Q3 Net Income of $9.2 billion.

• Net profit margins remain unbelievably high at 55%, up from 51% a year ago and just 11% two years ago. This is showing Nvidia’s continued dominance in the space with strong pricing power. Their new Blackwell chips are “estimated to cost around $30,000 each, meaning a cluster of 100,000 would cost $3 billion.” (WSJ).

Nvidia is now the 2nd largest company in the US by market cap and 5th largest in terms of Net Income.

How did it get there?

Thanks in large part to behemoths like Google and Microsoft which have more than doubled their CapEx spending over the last 6 quarters, with most of that increase dedicated to building out their AI infrastructure.

2) In Small Company

With a little over a month left in 2024, the S&P 500’s is up 28% including dividends. Going back to 1990, only 3 years had better start: 1995, 1997, and 2013.

The S&P 500 has now hit 52 all-time closing highs in 2024. The only years with more all-time highs:

• 1995 (77)
• 2021 (70)
• 1964 (65)
• 2017 (62)
• 2014 (53)
• 1961 (53)

3) The Mania Phase?

At its peak last week, the “bitcoin buying machine” known as MicroStrategy ($MSTR) had a market cap north of $100 billion.

Why is that notable?

Because it was nearly 3x higher than the value of its Bitcoin holdings at the time ($36 billion).

MicroStrategy’s 7-year return of 3,420% actually surpassed Nvidia (+2,660%) to become the top performing stock within the Russell 1000 Index over that time frame.

Is this the mania phase? It sure feels like it.

4) Post-Election: Financials Up, Health Care Down

Boosted by the prospect of significant deregulation, Financials are the best performing S&P 500 sector since the election with a return of 9.5%.

At the opposite end of the spectrum is Health Care (-1.1%), the only sector with a negative return. This is largely due to declines in pharmaceutical stocks over fears of increased scrutiny over drugs pricing and changes in regulatory policies.

5) The $36 Trillion Elephant in the Room

It’s official.

The US National Debt has hit $36 trillion for the first time, $13 trillion higher than where it stood just 5 years ago (a 57% increase).

Unless we see a concerted effort to cut the $2 trillion deficit, we’ll see more of these National Debt milestones in 2025.

6) The Milei Miracle

When Javier Milei took office as the new President of Argentina last December, their monthly inflation rate was 25.5%. Today it stands at 2.7%.

How did he accomplish this monumental feat?

By slashing federal spending by 32%, cutting the number of government ministries from 18 to 8, reducing energy and transport subsidies, and freezing public works projects. This generated Argentina’s first government surplus since 2008.

What is the best performing global equity market in 2024?

Argentina ($ARGT), with a gain of over 60%.

7) A Few Interesting Stats…

a) The S&P 500 is currently on pace for back-to-back years with a total return above 20%. The last time that happened? 1998-1999.

b) Two revolutionary companies went public twenty years ago. These are their returns since…

• Google ($GOOGL): +6,530%
• Domino’s Pizza ($DPZ): +7,370%

c) What are the historical odds that dollar-cost averaging (DCA) into stocks over 12 months will beat a lump sum investment? 33%. What about 36 months? 26%. The longer the DCA period, the lower the odds of beating a lump sum invested today.

d) US Credit Card debt hit a record $1.17 trillion in the 3rd quarter, rising 8% over the last year.

e) US stocks have been outperforming international stocks for 16 years running, and by a huge margin. The result: we’re now more than 3 standard deviations above the mean in terms of historical US outperformance.

And that’s it for this week. Have a happy Thanksgiving everyone!

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