Over the last month, the only thing that worked well in the Markets was US Tech: Nasdaq is up +5.5% while Europe is down 1.5% and HSI is down 6.5%
But beneath the surface of the Nasdaq, an epic battle is currently unfolding:
The Battle for … SECOND PLACE!
You see, there’s this silly little ETF called XLK, which tracks Tech stocks and has “only” $70 BILLION in Assets. Microsoft is the biggest holding with a 22.4% weight, then Apple with a 22.1% weight, followed by Nvidia with a 5.7% weight.
Up until Monday, NVDA had surpassed AAPL in market cap, so it should leapfrog into the second spot in the ETF.
The ETF has a Re-balance on June 21st and the cut-off date for establishing the new NUMBER TWO is June 14th.
Bloomberg estimates that should NDVA become the new Number Two, it would lead to $9.8bn of net buying for NVDA and $11.3bn of net selling for AAPL.
To be clear, $10bn in flows for these companies is literally funny money.
But for some reason, it matters to some people, especially since the 2 companies were neck-and-neck in Market Cap … until Monday that is.
The Apple Miracle happened after the WWDC Apple Event on Monday: The Event was deemed as a “Sell the News” Event and the stock closed down 2% on the day.
But the NEXT day, the wildest “mystery” ramp I’ve seen in a long time took place and on a $3 TRILLION company no less! It’s like the Armies of Apple Supporters came out to buy the stock and keep it above Nvidia’s Market Cap!
Well, it’s actually less obscure than that: Apple just cranked up the Buyback Machine! Tim Apple sent the Order and the stock went off to the races!
In this battle for second place, poor Jensen now lags behind Tim Apple by a whole 7%! What can he do? Can he sign more women’s breasts? That did help a little last time.
Tim Apple is one of the greatest financial engineers of his generation whereas Jensen is one of the greatest ACTUAL engineers of his generation. In this battle, financial engineering is likely to win. But the “Nvidia vs Apple Tit-for-Buyback-Tat” will be remembered as one of the most memorable battles of the Year. Until the next Rebalance that is :/
Disclaimer:
This isn’t financial advice. This is the equivalent of Monty Python for Finance but worse: This is the trading blog of a shrub.
Don’t be Stupid. Seriously. How many times do I have to repeat this ….
Just wanted to let you know that the "Calls with Paulo" updates are amazing.
Classic shrub write up. Tit for tat will never have the same meaning for me now. 😉