Three markets, three highs

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Katie Martin (0:38)

Pushkin.

Okay, buckle up for a vibe shift in markets. We've been getting a miserable grind higher in stocks globally throughout this year. Record high after record high, and all the kind of misery guts have been saying, oh, it's all gone too far. But now, all of a sudden, the animal spirits are in the house. US stocks have shot to a record high, but there's also some serious good vibes going on in Europe and Japan. We're going to break it all down for you.

This is the Unhedged podcast from the Financial Times and Pushkin. I'm Katie Martin. I'm a markets columnist here at the FT in London, and I am joined down the line from New York by the one and only Rob Armstrong from the Unhedged newsletter, who has returned uninjured crucially from a skiing trip.

Rob Armstrong (1:28)

In investing as in skiing, the crucial thing is don't get hurt.

Katie Martin (1:33)

Do not face plant. But look, Rob, I think the key thing here that has managed to inject this exuberance into global markets, we're going to talk about how that's going on in the US, but also in Europe and Japan. What's pushed us over the line is that you weren't here.

Have you considered going on holiday more often?

Rob Armstrong (2:01)

Yeah, and you know, that's true for investors generally, there's a lot to be said for ignoring things and just running them run.

Katie Martin (2:09)

Do not overtrade.

Rob Armstrong (2:10)

So the benign neglect theory of the Unhedged podcast, the Unhedged newsletter, stock markets, marriage, all of this stuff flies.

Katie Martin (2:21)

Yes. But look, it's not just like one week, right? So I was looking at some stats earlier from Jim Reid at Deutsche Bank, who was pointing out that we've had 15 weekly gains in the S&P 500 in the last 17 weeks. And it's the first time that's happened since 1989, which I'm going to say is before that Ethan Wu, who is not here this week, was born.

And we've also, if we get another positive week this week, that will be 16 in the last 18 weeks where we've been up. And that will be the first time since 1971, which is before even I was born. So we really are going back a bit here.

Rob Armstrong (3:00)

That is my birth year. I don't want to give away too much, but...

Katie Martin (3:03)

A very special vintage. A very special vintage.

So, you know, it's not really the fact that you weren't here, Rob, that has sprinkled the magic dust. It is, of course, everyone's favorite stock, Nvidia.

Rob Armstrong (3:15)

Nvidia.

Katie Martin (3:16)

Hell's teeth.

Rob Armstrong (3:17)

Expectations keep rising and they keep beating those expectations. And it's like this dream version of the world economy.

Where Nvidia sort of has sprinkled its fairy dust all over everything else. People are talking about how productivity might be growing again. The US economy at least is, in fact, growing really well. Other earnings reports are good. Everything is touched by this kind of halo covering Nvidia.

Katie Martin (3:43)

Because it's this chips monster, right? And its shares have been up like 11 million percent or whatever, you know, over the past sort of 12, 18 months. It's just been absolutely heading to the moon for the past year.

And there's just been this kind of gnawing worry among investors that this is too good to be true. This stock has just gone up too much. This company is like worth like one and a half trillion dollars or something. We're just worried that the stock is getting ahead of the earnings.

Rob Armstrong (4:11)

Almost two trillion.

Katie Martin (4:12)

Well, it is two now.

Rob Armstrong (4:13)

Yeah, it is two now. What is interesting, though, is there is still a lot of talk around in the United States market that this is an Nvidia rally, or it is a tech rally, or it is a big cap tech rally. But since October, when the market really started to turn around, actually everything in the United States is working. It's become an extraordinarily broad rally. Every sector of the S&P is up. Yeah. Industrials, consumer staples, et cetera, et cetera. There's only a few sectors, in fact, that are only up modestly. Most sectors are up like 10%.