Nvidia Slides as Board Probes CEO Jensen Huang; CPI Looms
Nvidia drops in pre-market trading after its board opens an investigation into CEO Jensen Huang. Stocks look to bounce ahead of Tuesday's CPI report, and China's factory-gate inflation hits its highest level since 2022.
Transcript
Alex: Welcome to Finance TL;DR Daily, the podcast where we break down the biggest stories in finance. It's Monday, November ninth. Nvidia's board is investigating its own CEO, and the stock is sliding about five percent before the open.
Riley: Here's what's moving today: Nvidia's board probe into Jensen Huang, a bounce for stocks ahead of a pivotal inflation report, and China's factory prices hitting their highest in more than four years.
Alex: At Friday's close, the S&P 500 finished at 7,376.86, up about a third of a percent, and the Nasdaq gained about 1.1 percent. The Dow slipped about half a percent.
Riley: The 10-year Treasury yield ended Friday at 4.86 percent. This morning, S&P 500 futures are up about eight-tenths of a percent and Dow futures more than one percent. Nvidia is the notable exception.
Alex: Nvidia is the central name in the AI trade, so a leadership question lands on anyone with AI exposure. On Sunday the board opened an independent investigation after reports that CEO Jensen Huang had been the target of a foreign intelligence effort.
Riley: What's the trigger? A memo Huang himself sent to staff.
Alex: Yes. In it he admitted an affair with Alice Huang, an executive at Megaspeed, whom US intelligence agencies reportedly consider a Chinese spy. In pre-market trading the stock is down roughly four to six percent, depending on the outlet. That's about two hundred billion dollars of market value.
Riley: Two hundred billion dollars, on a memo.
Alex: On a memo and a probe.
Riley: What has the company said? Nvidia says Huang "is committed to continuing to lead NVIDIA as CEO without interruption." The board says it has "no reason to believe" national security or company secrets were compromised.
Alex: Does that settle it for you?
Riley: Not really. "No reason to believe" describes what they know today. The investigation is still open. And Washington is already moving: three House Republican committee chairs have asked Huang to attend a closed-door briefing on November eighteenth, and Democrats are calling for an investigation or testimony.
Alex: I'd say leadership is the story. Investors are asking whether he stays.
Riley: I'd say earnings are the test. Nvidia reports on November seventeenth, the day before that briefing. Chip stocks were already hammered last Thursday, when Nvidia fell about nine percent.
Alex: So he faces analysts one day and lawmakers the next.
Riley: And the earnings call may end up being about more than data centers.
Alex: That's when the market learns how big this overhang really is.
Riley: That chip rout is the backdrop for the rest of the day. For anyone with a mortgage or a retirement account, Tuesday's inflation report matters, because it shapes whether the Fed raises rates in December, and that feeds straight into borrowing costs and stock prices.
Alex: Remind us how bad last week was.
Riley: The S&P 500 fell about 2.7 percent, its worst week since June. The Nasdaq lost about 3.4 percent after slipping into a correction on Thursday, when the Philadelphia semiconductor index dropped more than twelve percent in a day.
Alex: Twelve percent. For a chip index.
Riley: That's not a pullback, that's a very bad Thursday. Futures are bouncing this morning, helped by oil.
Alex: Oil's had a week of its own.
Riley: Brent and WTI each lost more than sixteen percent, the steepest weekly drop since April 2020, on hopes for a diplomatic end to the Iran war.
Alex: So inflation worries ease?
Riley: Partly. But Brent is still around ninety-eight dollars this morning, and that hope rests on a deal that isn't done. Now the data itself: October CPI, Tuesday at 8:30 Eastern. The consensus is for headline prices up 0.3 percent on the month and core, which strips out food and energy, up 0.2 percent.
Alex: That's down from September.
Riley: Sharply for headline. September was 0.6 percent, with core at 0.3. Futures pricing puts the odds of a quarter-point hike at the December eighth-to-ninth meeting at roughly eighty percent, according to CME's FedWatch.
Alex: So a soft print takes some of that out, and a hot one puts more in.
Riley: And stocks are tied to it. Daily Nasdaq 100 moves and changes in December hike pricing have a 0.61 correlation since October sixth. So a hot number could pressure stocks again.
Alex: And the earnings calendar adds to it.
Riley: CoreWeave reports Tuesday, then Applied Materials and Cisco on Thursday. All AI-linked, all after a week like that.
Alex: What's the one thing to carry into Tuesday?
Riley: Eighty percent is already priced for a hike, so the question for CPI is whether it moves that number.
Alex: Now to China, where the inflation picture is split in two. Energy costs are building up at the factory gate, which adds to the global inflation backdrop central banks are dealing with.
Riley: What did the numbers show?
Alex: Producer prices rose 5.7 percent in October from a year earlier, the fastest pace since June 2022, according to the National Bureau of Statistics. That's up from five percent in September, and above the 5.3 percent economists expected.
Riley: And consumers?
Alex: The opposite. Consumer inflation eased to 0.7 percent from 0.9, below the 0.8 forecast. Core slowed to 0.8 percent from 1.0.
Riley: So where is the factory pressure coming from?
Alex: Energy. Coal mining and washing prices jumped 36.6 percent from a year ago, and oil and gas extraction prices rose 35 percent.
Riley: Those are huge numbers. And the gap suggests manufacturers are absorbing the costs instead of passing them on.
Alex: That's the read. And with consumer inflation at 0.7 percent, it's well short of Beijing's target of around two percent.
Riley: I'd add that the monthly figure points the other way. Producer prices rose 0.7 percent in October, down from 1.2 percent in September. So the annual rate is climbing while the momentum is already cooling.
Alex: Does that fit the forecast? Capital Economics' Nguyen Hoang Nam said, "We expect the external price shock to persist over the coming months but fade next year, with producer prices returning to deflation."
Riley: Which means this reading could be a peak in the making, if the energy backdrop eases.
Alex: So the thing to remember is that China's factories feel the energy shock first, and consumers have barely felt it yet.
Riley: A day when a CEO, a rate decision and energy costs all test how much the AI rally can take.
Alex: And the tests arrive in order, starting tomorrow morning. This has been Finance TL;DR Daily. If it was useful, follow the show wherever you're listening. We'll see you tomorrow.
In this episode
- Nvidia falls about 5% after its board opens a probe into CEO Jensen Huang's relationship with an alleged Chinese spy, and Democrats eye oversight — source
- US stocks set to bounce after last week's AI-led rout as oil falls, with October CPI due Tuesday — source
- China's wholesale inflation hits its highest in more than four years while consumer inflation slows — source
Educational content only — not financial advice.