Last Tuesday Nvidia shed over $279 billion in value. It was the biggest one-day paper loss for a corporation in the history of the stock market. As a CNN report put it, “only 27 companies on the planet are worth as much as Nvidia lost in value on Tuesday.”
To which someone, somewhere will ponder how the catalyst (Nvidia) of the most recent stock-market run-up could have plunged so substantially. After all, the Federal Reserve is poised to reduce interest rates and, well, you know, equity markets are said to be led by the Fed. It’s said that stocks go up when the Fed is reducing rates, and down when the Fed is increasing them.
It’s a popular narrative that’s contradicted by the narrative; one that ignores the obvious about markets being populated by buyers and sellers. The Fed narrative presumes a market comprised solely of buyers. How else to explain the monstrous information asymmetry that would have to exist whereby uninformed sellers routinely sell shares to more informed buyers who are buying because they uniquely know the implications of the Fed cutting rates.
Read the full article at Forbes
