Inflation moderated last week. The market set records. Intel and Nvidia got financing for AI stuff. Retail traders read all three of those facts and decided the first one mattered.
It didn't.
Here's what happened. The CPI came in exactly where everyone expected. No surprises, according to the actual headline. Which means a thousand daytraders spent their week watching Jerome Powell's face on YouTube at 2x speed, learning nothing they didn't already know on Tuesday. Then they checked their portfolios Thursday and saw they were up anyway. Not because they understood inflation. Because Nvidia needed more money to build chips and someone gave it to them.
Intel also fueled the AI trade, apparently. Intel. The company that spent a decade losing to AMD and another year explaining why their chips don't work for the thing everyone wants chips for. But they got financing too. So the line went up. Retail looked at their accounts and thought they'd cracked the Fed.
They hadn't cracked anything.
The chart already knew where it was going before the inflation print. It knew before the financing announcements. It definitely knew before some guy in Michigan refreshed his Robinhood app forty times waiting for the CPI number. The information was priced in, then repriced, then priced in again while he was Googling what core PCE means.
Meanwhile he's telling his wife they're inflation-hedged because he bought Nvidia at the top. She's nodding. She stopped listening in March.
The record-breaking action had nothing to do with moderating inflation and everything to do with two chip companies finding bag holders with better credit ratings.
Photo by Caspar Camille Rubin on Unsplash
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