In the Markets, a Tug of War Between Big Tech and the Fed


But whether the current bull market has any chance of being sustained will depend in large part on the Fed’s ability to dampen inflation without harming the core of the economy. And excessive exuberance in financial markets could further delay Fed rate cuts, which were expected to begin by now, but are now deemed unlikely to start until at least June. The Fed doesn’t explicitly target asset prices, but it could be forced to hold rates high if it appears that a dangerous bubble is forming.

Yet continued Fed inaction would protract the pain of consumers who have been financing purchases at punishingly high interest rates. Those rates are making the cost of housing and credit and auto loan debt painfully expensive. Quite likely, the debt burden is contributing to dissatisfaction among voters, who give the Biden administration poor marks for the economy. What’s more, if consumers run out of steam, the Fed’s campaign to steer the economy safely toward a low-inflation future could run into serious trouble.

Consider what happened at the meetings.

In a vast space usually reserved for San Jose Sharks hockey games and rock concerts, Jensen Huang, the chief executive of Nvidia, told a standing-room-only crowd of tech developers, investors and corporate executives on Monday that the future of A.I. had arrived, right there, in front of them.

Pacing the darkened stage in a black leather jacket, jeans and sneakers, Mr. Huang held two prototype circuit boards containing Nvidia’s latest superfast chips. These are “amazing” products, he said. “This right here is, I don’t know, $10 billion,” he said. “The second one’s $5” billion.

Customers will pay less for models off the production line, he said, without saying how much. But no matter. The enormous investments in A.I. hardware will save companies money, Mr. Jensen said, because the new technology is so much faster and more efficient than that of the last generation. And this annual event, which Bank of America has called “A.I. Woodstock,” was filled with deep-pocketed true believers. Hundreds of companies are already on board, Mr. Jensen said, and Nvidia’s chips, components and software will be the vibrant core of A.I. for years to come.

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