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> This news tanked 5% off the Nasdaq yesterday No, it did not. The market moved in reaction to earnings misses from e.g. Broadcom [1] and the strong jobs repor

> This news tanked 5% off the Nasdaq yesterday No, it did not. The market moved in reaction to earnings misses from e.g. Broadcom [1] and the strong jobs report. [1] https://finance.yahoo.com/markets/article/broadcom-stock-sinks-12-as-ai-chip-forecast-disappoints-165602082.html https://finance.yahoo.com/markets/article/broadcom-stock-sin...

vasco 5mo ago
The market moved in reaction to the totality of events that happened in the world all averaged out through the actions of the participants, anyone who says "this" was what happened on any day is wrong. Some days have dominating factors but even if the event is the dominant one, the reason why it has the impact it does might be a 3rd or 4th level effect.
- JumpCrisscross 5mo ago
  > anyone who says "this" was what happened on any day is wrong There is never a singular reason. But there are negligible reasons. S&P not changing its rules was a negligible reason for today's tanking.
  - altmanaltman 5mo ago
    But how can you quantify that? There is no way to prove it, the market cannot say "I wasn't moved by this, I was actually moved by that and this part was actually just negligible." Isn't it all subjective in the end because nobody really makes their trades with verifiable notes expressing the exact reason. So we can only guess right?
    - JumpCrisscross 5mo ago
      > how can you quantify that? Precedent and timing. Rates-related news is always going to massively shift the market, and the market shifting right after the jobs report is a pretty clear signal. Moreover, S&P holding course wasn't new information–there was zero evidence of anyone pre-trading a rebalancing, which means the market didn't expect S&P to materially change its rules.
- khazhoux 5mo ago
  Thank you! So sick of people always ascribing the market's movement to whichever narrative headline they pick that day.
  - iugtmkbdfil834 5mo ago
    Heh. I would not discount narrative so fast. You may not believe it, but it does not mean others don't.
    - kd913 5mo ago
      My theory is hedgies and investment banks using semi and ai hype as a liquidity bridge to drop into SpaceX which happens next week. Arm and AMD pumped to insane levels on basically nothing. What proof is there for your narrative versus mine?
      - JumpCrisscross 5mo ago
        > a liquidity bridge to drop into SpaceX What does this mean?
        kd913 5mo ago
        It means financial companies have been illogically pumping semiconductor companies the last 5 months despite the profits, royalties and supply chain being entire worse than a year ago. They pumped ai adjacent stocks to draw retail in, to provide liquidity now when they are in theory forced to purchase SpaceX. Effectively getting people to buy semi-ai stocks at a premium to fund their forced purchase for SpaceX.
      - bakies 5mo ago
        > AMD is nothing What? SpaceX is the hype not AMD guy
        iugtmkbdfil834 5mo ago
        I will admit that I am starting to understand Musk's contempt for retail investors. edit: They have no problem lining behind supporting what is now effectively Musk oriented slush fund.
d--b 5mo ago
The strong job numbers too. On a side note, I find it very sad that strong job numbers make stock plummet. It really is an indication that the stock market is mostly speculative and not concerned about the actual economy.
- JumpCrisscross 5mo ago
  > It really is an indication that the stock market is mostly speculative and not concerned about the actual economy Not really. Strong jobs numbers in the midst of 3+ percent inflation means rates should go up. That, in turn, dilates time on future earnings. So making a company's future earnings more-heavily discounted will be a net drag on valuations even if the jobs numbers indicate those numbers, near term and far, will be higher.
  - andric 5mo ago
    Yep. Job numbers are the “actual economy” – the actual economy is driven by wages and consumption. Stronger wages → stronger consumption → higher demand-pull inflation. But higher inflation implying that “rates should go up” is central bank doctrine. It’s not a general law of how economies function. Central banks intervening with interest rate adjustments is what distorts the prices of equities downward, when inflation rises. Without central bank intervention, inflation should theoretically push equities higher (a highly-inflated economy driven by rising demand is by definition a well-performing economy!). Central banks intervene because runaway inflation can be harmful to wage-earners (they save in dollars, not assets). But I’m not sure if a 2–3% inflation target is ideal. It seems to me that this arbitrarily low inflation target restricts the growth of the economy in ways that might affect wage-earners, defeating the stated purpose of monetary policy, since higher rates also have the effect of curbing job growth as well as raising the cost of servicing mortgages.
    - JumpCrisscross 5mo ago
      > higher inflation implying that “rates should go up” is central bank doctrine Uh, no. If you have no central bank, more consumption and more employment means more demand for money. Ceteris paribus, that will raise rates. (Our own history with free banking is more complicated since the only inflationary period was driven by specie introduction from California's gold rush. The predominant problem in antebellum America was deflation and bank collapses.) You're correct inasmuch as central banks quicken this reaction, and–when done properly–dampen it. But the fundamental engine is emergent, at least for nominal rates.
gizajob 5mo ago
That’s a lazy take. My spidey senses tell me otherwise.
energy123 5mo ago
and Meta saying they want to issue. Combined with the IPO scramble there's a lot of dilution and raising hitting the same sector in a very short period of time. Can the public markets pony up the cash in the short timeframe? It seems investors said no, or at least the uncertainty was high enough that they trimmed the risk.
- JumpCrisscross 5mo ago
  > Can the public markets pony up the cash in the short timeframe? Yes, very easily, American households alone plop a few hundred billion to over a trillion dollars into the stock market every quarter. Whether investors want to is another question. (The answer, at least to the tune of $75bn for SpaceX, seems to be yes.)
  - energy123 5mo ago
    What I mean is that investors don't want to pony up the cash at current market prices. They want a discount. Then they will pony up the cash Just like creditors demand higher rates on investment grade bonds, investors are demanding a higher risk premium if they're going to be expected to keep piling in cash to this particular sector that's diluting and raising.
    - JumpCrisscross 5mo ago
      > investors don't want to pony up the cash at current market prices I don't think anyone can say this until the IPO goes out. Right now, all we're seeing is discount rates being adjusted market wide in anticipation of a rate hike.
  - gizajob 5mo ago
    I thought most of those households was massively in debt?
gizajob 5mo ago
That is what looked like the catalyst but seeing the response made me feel the confirmation from the S&P really was a big factor, particularly because the algorithms must all have been banking on the rapid inclusion for the AI companies which would keep the tech ship afloat at its current valuation. I don’t think the jobs report was enough either, and the market hasn’t really been reacting strongly to ideas about interest rates shifting, I’d say in the current climate them staying the same is priced in about as much as the, changing.

vasco 5mo ago

The market moved in reaction to the totality of events that happened in the world all averaged out through the actions of the participants, anyone who says "this" was what happened on any day is wrong. Some days have dominating factors but even if the event is the dominant one, the reason why it has the impact it does might be a 3rd or 4th level effect.

JumpCrisscross 5mo ago
> anyone who says "this" was what happened on any day is wrong There is never a singular reason. But there are negligible reasons. S&P not changing its rules was a negligible reason for today's tanking.
- altmanaltman 5mo ago
  But how can you quantify that? There is no way to prove it, the market cannot say "I wasn't moved by this, I was actually moved by that and this part was actually just negligible." Isn't it all subjective in the end because nobody really makes their trades with verifiable notes expressing the exact reason. So we can only guess right?
  - JumpCrisscross 5mo ago
    > how can you quantify that? Precedent and timing. Rates-related news is always going to massively shift the market, and the market shifting right after the jobs report is a pretty clear signal. Moreover, S&P holding course wasn't new information–there was zero evidence of anyone pre-trading a rebalancing, which means the market didn't expect S&P to materially change its rules.
khazhoux 5mo ago
Thank you! So sick of people always ascribing the market's movement to whichever narrative headline they pick that day.
- iugtmkbdfil834 5mo ago
  Heh. I would not discount narrative so fast. You may not believe it, but it does not mean others don't.
  - kd913 5mo ago
    My theory is hedgies and investment banks using semi and ai hype as a liquidity bridge to drop into SpaceX which happens next week. Arm and AMD pumped to insane levels on basically nothing. What proof is there for your narrative versus mine?
    - JumpCrisscross 5mo ago
      > a liquidity bridge to drop into SpaceX What does this mean?
      - kd913 5mo ago
        It means financial companies have been illogically pumping semiconductor companies the last 5 months despite the profits, royalties and supply chain being entire worse than a year ago. They pumped ai adjacent stocks to draw retail in, to provide liquidity now when they are in theory forced to purchase SpaceX. Effectively getting people to buy semi-ai stocks at a premium to fund their forced purchase for SpaceX.
    - bakies 5mo ago
      > AMD is nothing What? SpaceX is the hype not AMD guy
      - iugtmkbdfil834 5mo ago
        I will admit that I am starting to understand Musk's contempt for retail investors. edit: They have no problem lining behind supporting what is now effectively Musk oriented slush fund.

d--b 5mo ago

The strong job numbers too. On a side note, I find it very sad that strong job numbers make stock plummet. It really is an indication that the stock market is mostly speculative and not concerned about the actual economy.

JumpCrisscross 5mo ago
> It really is an indication that the stock market is mostly speculative and not concerned about the actual economy Not really. Strong jobs numbers in the midst of 3+ percent inflation means rates should go up. That, in turn, dilates time on future earnings. So making a company's future earnings more-heavily discounted will be a net drag on valuations even if the jobs numbers indicate those numbers, near term and far, will be higher.
- andric 5mo ago
  Yep. Job numbers are the “actual economy” – the actual economy is driven by wages and consumption. Stronger wages → stronger consumption → higher demand-pull inflation. But higher inflation implying that “rates should go up” is central bank doctrine. It’s not a general law of how economies function. Central banks intervening with interest rate adjustments is what distorts the prices of equities downward, when inflation rises. Without central bank intervention, inflation should theoretically push equities higher (a highly-inflated economy driven by rising demand is by definition a well-performing economy!). Central banks intervene because runaway inflation can be harmful to wage-earners (they save in dollars, not assets). But I’m not sure if a 2–3% inflation target is ideal. It seems to me that this arbitrarily low inflation target restricts the growth of the economy in ways that might affect wage-earners, defeating the stated purpose of monetary policy, since higher rates also have the effect of curbing job growth as well as raising the cost of servicing mortgages.
  - JumpCrisscross 5mo ago
    > higher inflation implying that “rates should go up” is central bank doctrine Uh, no. If you have no central bank, more consumption and more employment means more demand for money. Ceteris paribus, that will raise rates. (Our own history with free banking is more complicated since the only inflationary period was driven by specie introduction from California's gold rush. The predominant problem in antebellum America was deflation and bank collapses.) You're correct inasmuch as central banks quicken this reaction, and–when done properly–dampen it. But the fundamental engine is emergent, at least for nominal rates.

gizajob 5mo ago

That’s a lazy take. My spidey senses tell me otherwise.

energy123 5mo ago

and Meta saying they want to issue. Combined with the IPO scramble there's a lot of dilution and raising hitting the same sector in a very short period of time. Can the public markets pony up the cash in the short timeframe? It seems investors said no, or at least the uncertainty was high enough that they trimmed the risk.

JumpCrisscross 5mo ago
> Can the public markets pony up the cash in the short timeframe? Yes, very easily, American households alone plop a few hundred billion to over a trillion dollars into the stock market every quarter. Whether investors want to is another question. (The answer, at least to the tune of $75bn for SpaceX, seems to be yes.)
- energy123 5mo ago
  What I mean is that investors don't want to pony up the cash at current market prices. They want a discount. Then they will pony up the cash Just like creditors demand higher rates on investment grade bonds, investors are demanding a higher risk premium if they're going to be expected to keep piling in cash to this particular sector that's diluting and raising.
  - JumpCrisscross 5mo ago
    > investors don't want to pony up the cash at current market prices I don't think anyone can say this until the IPO goes out. Right now, all we're seeing is discount rates being adjusted market wide in anticipation of a rate hike.
- gizajob 5mo ago
  I thought most of those households was massively in debt?

gizajob 5mo ago

That is what looked like the catalyst but seeing the response made me feel the confirmation from the S&P really was a big factor, particularly because the algorithms must all have been banking on the rapid inclusion for the AI companies which would keep the tech ship afloat at its current valuation. I don’t think the jobs report was enough either, and the market hasn’t really been reacting strongly to ideas about interest rates shifting, I’d say in the current climate them staying the same is priced in about as much as the, changing.