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These healthy diets were associated with lower risk of death, according to a study of 119,000 people across four decades

Eat healthy, live longer.

That’s the takeaway from a major study published this month in JAMA Internal Medicine. Scientists led by a team from the Harvard TH Chan School of Public Health found that people who most closely adhered to at least one of four healthy eating patterns were less likely to die from cardiovascular disease, cancer or respiratory disease compared with people who did not adhere as closely to these diets. They were also less likely to die of any cause.

“These findings support the recommendations of Dietary Guidelines for Americans that multiple healthy eating patterns can be adapted to individual food traditions and preferences,” the researchers concluded, adding that the results were consistent across different racial and ethnic groups. The eating habits and mortality rates of more than 75,000 women from 1984 to 2020 over 44,000 men from 1986 to 2020 were included in the study.

The four diets studied were the Healthy Eating Index, the Alternate Mediterranean Diet, the Healthful Plant-Based Diet Index and the Alternate Healthy Eating Index. All four share some components, including whole grains, fruits, vegetables, nuts and legumes. But there are also differences: For instance, the Alternate Mediterranean Diet encourages fish consumption, and the Healthful Plant-Based Diet Index discourages eating meat.

The Alternate Mediterranean Diet is adapted from the original Mediterranean Diet, which includes olive oil (which is rich in omega-3 fatty acids), fruits, nuts, cereals, vegetables, legumes and fish. It allows for moderate consumption of alcohol and dairy products but low consumption of sweets and only the occasional serving of red meat. The alternate version, meanwhile, cuts out dairy entirely, only includes whole grains and uses the same alcohol-intake guideline for men and women, JAMA says.

The world’s ‘best diets’ overlap with study results

The Mediterranean Diet consistently ranks No. 1 in the US News and World Report’s Best Diets ranking, which looks at seven criteria: short-term weight loss, long-term weight loss, effectiveness in preventing cardiovascular disease, effectiveness in preventing diabetes, ease of compliance, nutritional completeness and health risks. The 2023 list ranks the top three diets as the Mediterranean Diet, the DASH Diet and the Flexitarian Diet.

The DASH (Dietary Approaches to Stop Hypertension) Diet recommends fruits, vegetables, nuts, whole grains, poultry, fish and low-fat dairy products and restricts salt, red meat, sweets and sugar-sweetened beverages. The Flexitarian Diet is similar to the other diets in that it’s mainly vegetarian, but it allows the occasional serving of meat or fish. All three diets are associated with improved metabolic health, lower blood pressure and reduced risk of Type 2 diabetes.

Frank Hu, a professor of nutrition and epidemiology at the Harvard School of Public Health and co-author of the latest study, said it’s critical to examine the associations between the US government’s Dietary Guidelines for Americans and long-term health. “Our findings will be valuable for the 2025-2030 Dietary Guidelines Advisory Committee, which is being formed to evaluate current evidence surrounding different eating patterns and health outcomes,” he said.

Reducing salt intake is a good place to start. In 2021, the Food and Drug Administration issued new guidance for restaurants and food manufacturers to, over a two-and-a-half-year period, voluntarily reduce the amount of sodium in their food to help consumers stay under a limit of 3,000 milligrams per day — still higher than the recommended daily allowance. Americans consume around 3,400 milligrams of sodium per day, on average, but the Centers for Disease Control and Prevention recommends that people consume less than 2,300 milligrams each day.

Related: Eating 400 calories a day from these foods could raise your dementia risk by over 20%



US Treasurys at ‘critical point’: Stocks, bonds correlation shifts as fixed-income market flashes recession warning

Bonds and stocks may be getting back to their usual relationship, a plus for investors with a traditional mix of assets in their portfolios amid fears that the US faces a recession this year.

“The bottom line is the correlation now has shifted back to a more traditional one, where stocks and bonds do not necessarily move together,” said Kathy Jones, chief fixed-income strategist at Charles Schwab, in a phone interview. “It is good for the 60-40 portfolio because the point of that is to have diversification.”

That classic portfolio, consisting of 60% stocks and 40% bonds, was hammered in 2022. It’s unusual for both stocks and bonds to tank so precipitously, but they did last year as the Federal Reserve rapidly raised interest rates in an effort to tame surging inflation in the US

While inflation remains high, it has shown signs of easing, raising investors’ hopes that the Fed could slow its aggressive pace of monetary tightening. And with the bulk of interest rate hikes potentially over, bonds seem to be returning to their role as safe havens for investors fearing gloom.

“Slower growth, less inflation, that’s good for bonds,” said Jones, pointing to economic data released in the past week that reflected those trends.

The Commerce Department said Jan. 18 that retail sales in the US slid a sharp 1.1% in December, while the Federal Reserve released data that same day showing US industrial production fell more than expected in December. Also on Jan. 18, the US Bureau of Labor Statistics said the producer-price index, a gauge of wholesale inflation, dropped last month.

Stock prices fell sharply that day amid fears of a slowing economy, but Treasury bonds rallied as investors sought safe-haven assets.

“That negative correlation between the returns from Treasuries and US equities stands in stark contrast to the strong positive correlation that prevailed over most of 2022,” said Oliver Allen, a senior markets economist at Capital Economics, in a Jan. 19 notes. The “shift in the US stock-bond correlation might be here to stay.”

A chart in his note illustrates that monthly returns from US stocks and 10-year Treasury bonds were often negatively correlated over the past two decades, with 2022’s strong positive correlation being relatively unusual over that time frame.


“The retreat in inflation has much further to run,” while the US economy may be “taking a turn for the worse,” Allen said. “That informs our view that Treasuries will eke out further gains over the coming months even as US equities struggle.”

The iShares 20+ Year Treasury Bond ETF TLT,
has climbed 6.7% this year through Friday, compared with a gain of 3.5% for the S&P 500 SPX,
according to FactSet data. The iShares 10-20 Year Treasury Bond ETF TLH,
rose 5.7% over the same period.

Charles Schwab has “a pretty positive view of the fixed-income markets now,” even after the bond market’s recent rally, according to Jones. “You can lock in an attractive yield for a number of years with very low risk,” she said. “That’s something that has been missing for a decade.”

Jones said she likes US Treasurys, investment-grade corporate bonds, and investment-grade municipal bonds for people in high tax brackets.

Read: Vanguard expects municipal bond ‘renaissance’ as investors should ‘salivate’ at higher yields

Keith Lerner, co-chief investment officer at Truist Advisory Services, is overweight fixed income relative to stocks as recession risks are elevated.

“Keep it simple, stick to high-quality” assets such as US government securities, he said in a phone interview. Investors start “gravitating” toward longer-term Treasurys when they have concerns about the health of the economy, he said.

The bond market has signaled concerns for months about a potential economic contraction, with the inversion of the US Treasury market’s yield curve. That’s when short-term rates are above longer-term yields, which historically has been viewed as a warning sign that the US may be heading for a recession.

But more recently, two-year Treasury yields TMUBMUSD02Y,
caught the attention of Charles Schwab’s Jones, as they moved below the Federal Reserve’s benchmark interest rate. Typically, “you only see the two-year yield go under the fed funds rate when you’re going into a recession,” she said.

The yield on the two-year Treasury note fell 5.7 basis points over the past week to 4.181% on Friday, in a third straight weekly decline, according to Dow Jones Market Data. That compares with an effective federal funds rate of 4.33%, in the Fed’s targeted range of 4.25% to 4.5%.

Two-year Treasury yields peaked more than two months ago, at around 4.7% in November, “and have been trending down since,” said Nicholas Colas, co-founder of DataTrek Research, in a note emailed Jan. 19. “This further confirms that markets strongly believe the Fed will be done raising rates very shortly.”

As for longer-term rates, the yield on the 10-year Treasury note TMUBMUSD10Y,
ended Friday at 3.483%, also falling for three straight weeks, according to Dow Jones Market data. Bond yields and prices move in opposite directions.

‘Bad sign for stocks’

Meanwhile, long-dated Treasuries maturing in more than 20 years have “just rallied by more than 2 standard deviations over the last 50 days,” Colas said in the DataTrek note. “The last time this happened was early 2020, going into the Pandemic Recession.”

Long-term Treasurys are at “a critical point right now, and markets know that,” he wrote. Their recent rally is bumping up against the statistical limit between general recession fears and pointed recession prediction.”

A further rally in the iShares 20+ Year Treasury Bond ETF would be “a bad sign for stocks,” according to DataTrek.

“An investor can rightly question the bond market’s recession-tilting call, but knowing it’s out there is better than being unaware of this important signal,” said Colas.

The US stock market ended sharply higher Friday, but the Dow Jones Industrial Average DJIA,
and S&P 500 each booked weekly losses to snap a two-week win streak. The technology-heavy Nasdaq Composite erased its weekly losses on Friday to finish with a third straight week of gains.

In the coming week, investors will weigh a wide range of fresh economic data, including manufacturing and services activity, jobless claims and consumer spending. They’ll also get a reading from the personal-consumption-expenditures-price index, the Fed’s preferred inflation gauge.

‘Backside of the storm’

The fixed-income market is in “the backside of the storm,” according to Vanguard Group’s first-quarter report on the asset class.

“The upper-right quadrant of a hurricane is called the ‘dirty side’ by meteorologists because it is the most dangerous. It can bring high winds, storm surges, and spin-off tornadoes that cause massive destruction as a hurricane makes landfall,” Vanguard said in the report.

“Similarly, last year’s fixed income market was hit by the brunt of a storm,” the firm said. “Low initial rates, surprisingly high inflation, and a rate-hike campaign by the Federal Reserve led to historic bond market losses.”

Now, rates might not move “much higher,” but concerns about the economy persist, according to Vanguard. “A recession looms, credit spreads remain uncomfortably narrow, inflation is still high, and several important countries face fiscal challenges,” the asset manager said.

Read: Fed’s Williams says ‘far too high’ inflation remains his No. 1 concern


Given expectations for the US economy to weaken this year, corporate bonds will probably underperform government fixed income, said Chris Alwine, Vanguard’s global head of credit, in a phone interview. And when it comes to corporate debt, “we are defensive in our positioning.”

That means Vanguard has lower exposure to corporate bonds than it would typically, while looking to “upgrade the credit quality of our portfolios” with more investment-grade than high-yield, or so-called junk, debt, he said. Plus, Vanguard is favoring non-cyclical sectors such as pharmaceuticals or healthcare, said Alwine.

There are risks to Vanguard’s outlook on rates.

“While this is not our base case, we could see a Fed, faced with continued wage inflation, forced to raise a fed funds rate closer to 6%,” Vanguard warned in its report. The climb in bond yields already seen in the market would “help temper the pain,” the firm said, but “the market has not yet begun to price such a possibility.”

Alwine said he expects the Fed will lift its benchmark rate to as high as 5% to 5.25%, then leave it at around that level for possibly two quarters before it begins easing its monetary policy.

“Last year, bonds were not a good diversifier of stocks because the Fed was raising rates aggressively to address the inflation concerns,” said Alwine. “We believe the most typical correlations are coming back.”



The US economy won’t collapse under Fed’s ‘weight’ based on the performance of these sectors despite inflation and oil risks

Investors are trying to read the tea leaves in a choppy US stock market to gauge whether its recent run higher can continue after Federal Reserve Chair Jerome Powell unleashed bullish sentiment at the end of November by indicating its aggressive interest rate hikes could slow.

“The leadership of the stock market is telling you that the economy isn’t going to collapse under the weight of the Fed in the near term,” said Andrew Slimmon, a senior portfolio manager for equities at Morgan Stanley Investment Management, in a phone interview. “I think you’re going to get a strong market into year-end.”

Slimmon pointed to the outperformance of cyclical sectors of the market, including financials, industrials, and materials over the past couple months, saying that those sectors “would be rolling over dying” if the economy and corporate earnings were on the verge of collapse.

The US added a robust 263,000 new jobs in November, exceeding the forecast of 200,000 from economists polled by The Wall Street Journal. The unemployment rate was unchanged at 3.7%, the US Bureau of Labor Statistics reported Friday. That’s near a half-century low. Meanwhile, hourly pay rose 0.6% last month to an average of $32.82, the report shows.

The “resilience” of the labor market and “resurgence in wage pressures” won’t keep the Fed from slowing its pace of rate hikes this month, Capital Economics said in an emailed note Friday. Capital Economics said it’s still expecting the central bank to reduce the size of its next interest rate hike in December to 50 basis points, after a string of 75-basis-point increases.

“In the bigger picture, a strong job market is good for the economy and only bad because of the Fed’s mission to stifle inflation,” said Louis Navellier, chief investment officer at Navellier, in a note Friday.

The Fed has been lifting its benchmark interest rate in an effort to tame high inflation that showed signs of easing in October based on consumer-price index data. This coming week, investors will get a reading on wholesale inflation for November as measured by the producer-price index. The PPI data will be released Dec. 9.

“That will be an important number,” said Slimmon.

The producer-price index is much more driven by supply issues than consumer demand, according to Jeffrey Kleintop, Charles Schwab’s chief global investment strategist.

“I think the PPI pressures have peaked out based on the decline we’ve seen in supply chain problems,” Kleintop said in a phone interview. He said that he’s expecting that the upcoming PPI print may reinforce the overall message of central banks stepping down the pace of rate hikes.

This coming week investors will also be keeping a close watch on initial jobless claims data, due out Dec. 8, as a leading indicator of the health of the labor market.

“We are not out of the woods,” cautioned Morgan Stanley’s Slimmon. Although he’s optimistic about the stock market in the near term, partly because “there’s a lot of money on the sidelines” that could help fuel a rally, he pointed to the Treasury market’s inverted yield curve as reason for concern.

Inversions, when shorter-term Treasury yields rise above longer-term rates, historically have preceded a recession.

“Yield curves are excellent predictors of economic slowdowns, but they’re not very good predictors of when it will happen,” Slimmon said. His “suspicion” is that a recession could come after the first part of 2023.

‘Massive technical recovery’

Meanwhile, the S&P 500 index closed slightly lower Friday at 4,071.70, but still booked a weekly gain of 1.1% after surging Nov. 30 on Powell’s remarks at the Brookings Institution indicating that the Fed may downshift the size of its rate hikes at its Dec. 13-14 policy meeting.

“The bears disparaged” the Powell-induced rally, saying his speech was “hawkish and didn’t justify the market’s bullish spin,” Yardeni Research said in a note emailed Dec. 1. But “we believe that the bulls correctly perceive that inflation peaked this summer and were relieved to hear Powell say that the Fed might be willing to let inflation subsidize without pushing the economy into a recession.”

While this year’s inflation crisis has led investors to focus “solely on danger, not opportunity,” Powell was signaling that it’s time to look at the latter, according to Tom Lee, head of research at Fundstrat Global Advisors, in a note Friday morning. Lee already had been bullish ahead of Powell’s Brookings speech, detailing in a Nov. 28 note, 11 headwinds of 2022 that have ‘flipped.’

See: Stock market could see ‘fireworks’ through the end of the year as headwinds have ‘flipped,’ Fundstrat’s Tom Lee says

The S&P 500 has clawed its way back above its 200-day moving average, which Lee highlighted in his note Friday ahead of the stock market’s open. He pointed to the index’s second straight day of closing above that moving average as a “massive technical recovery,” writing that “in the ‘crisis’ of 2022, this has not happened (see below), so this is a break in pattern. ”


On Friday, the S&P 500 SPX,
again closed above its 200-day moving average, which then stood at 4,046, according to FactSet data.

Navellier said in a note Friday that the 200-day moving average was “important” to watch that day as whether the US stock-market benchmark finished above or below it could “lead to further momentum in either direction.”

But Charles Schwab’s Kleintop says he might “put a little less weight on the technicals” in a market that’s currently more macro driven. “When a simple word from Powell could push” the S&P 500 above or below the 200-day moving average, he said, “this is maybe not as much driven by supply or demand of equity by individual investors.”

Kleintop said he’s eyeing a risk to the equity market next week: a price cap on Russian oil that could take effect as soon as Monday. He worries about how Russia may respond to such a cap. If the country moves to withhold oil from the global market, he said, that could cause “oil prices CL.1,
to shoot back up again” and add to inflationary pressures.

Read: G-7 and Australia join EU in setting $60-per-barrel price cap on Russian oil

Navellier, who said a “soft landing is still possible” if inflation falls faster than expected, also expressed concern over energy prices in his note. “One thing that may re-ignite inflation would be a spike in energy prices, which is best hedged by overexposure to energy stocks,” he wrote.

“Volatility is likely to remain high,” according to Navellier, who pointed to “the Fed’s resolve to keep tapping the brakes.”

US stocks have taken some big swings lately, with the S&P 500 climbing more than 5% last month after jumping 8% in October and sliding more than 9% in September, FactSet data show. Major benchmarks ended mixed Friday, but the S&P 500, Dow Jones Industrial Average DJIA,
and technology-heavy Nasdaq Composite COMP,
each rose for a second straight week.

“Keep the bias to quality earners,” said Navellier, “taking advantage to add on pullbacks.”



November jobs report is most important data for inflation this year- and not in a good way

The November US jobs report on Friday showed the US economy gained 261,000 jobs last month, with the unemployment rate holding steady at 3.7%.

Economists polled by the Wall Street Journal had expected an addition of 200,000 jobs.

Wages jumped 0.6% in November, double the expected pace.

Below are some initial reactions from economists and other analysts as US stocks DJIA,

traded lower and the yield on the 10-year Treasury note TMUBMUSD10Y,
jumped following the data on nonfarm payrolls.

  • “You probably want to revise your view on inflation and it’s overall dynamic more based on today’s job report than any other data report this entire year. And not in a favorable direction,” said Jason Furman, economics professor at Harvard and former Obama White House economist.

  • “A stronger than expected 263,000 monthly payroll print plus the spike in wages…will reinforce the Fed’s assessment that the labor market remains very overheated, and rates will need to go higher for longer in order to bring it back into balance,” said Krishna Guha , vice chairman of Evercore ISI.

  • “The Fed will not like the renewed strength in wages,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

  • “The US labor market has lost some momentum this year, but it’s still speeding ahead as we approach the new year. Continue to underestimate the momentum in the US labor market at your own peril. Job gains continue to be added at a pace that would have drawn cheers in 2019. The labor market might encounter some bumps in the road next year, but it’s heading into 2023 cruising,” said Nick Bunker, head of economic research at the Indeed Hiring Lab.



The best-performing sector in 2022 is not finished crushing it, says Citi, offering three stocks to buy

You can count on it, say our call of the day provided by Citigroup, though they say investors can’t expect as lofty returns.

“We see market rotation into energy equities as having further to run, even though names in our US coverage already sit at all-time highs,” a team of analysts led by Alastair R Syme told clients in a fresh note. “History says energy equities usually perform well in an earnings recession, Citi’s base-case for 2023.”


That bullish view comes after energy roared back into the spotlight on Monday, providing at least some distraction from the equity market’s endless bear-bottom debates.

Hitting a level not seen since January, crude tumbled to $75.08 a barrel on rumors OPEC was mulling a production increase. A swift denial from Saudi Arabia pushed prices back near $80, where they are sitting for Tuesday.

Oil’s tumble also briefly knocked the year’s best performing energy sector, via the SPDR Energy Select Sector ETF XLE,
to four-month lows before it recouped some losses. The ETF is still up a whopping 62% this year, beating all comers.

To be sure, the path for the commodity backing those stocks is a murky one, with crude struggling to make new highs since a summer run to over $109 a barrel.

But Citi’s Syme and the team say they can look past the fundamental oil picture, for now.

“Our view on the sector comes despite a view that commodity-price inflation, the story of 2021 and early 2022, is now largely behind us. We expect oil markets to begin to see inventory builds from next spring. Gas remains uncertain during the winter, but generally, we think the global energy system is adapting to accommodate Europe’s crisis,” said Citi.

As for Citi’s view that energy equities perform well in a recession, they admit that the highest returns usually come in the first year of the market rotation. However, Syme said outperformance will typically carry on until the earnings cycle turns. They lifted price targets on several energy names and upgraded BP BP

to buy.

“Without commodity price-inflation, growth and asset duration becomes a more important driver of relative equity performance, in our view,” said the analysts. Their three top picks in the energy sector are buy-rated BP BP
— upgraded by Citi on Tuesday — Spain’s Repsol ES:REP

and Conoco Phillips COP.

Citi backed up its BP upgrade with some advantages it sees: valuations that put it over European peers; a lack of chemicals exposure, which they see as a key headwind for global peers in 2023; and the potential to differentiate around underlying growth, driven by upstream and marketing.

Citi lifted its target price for BP to 540 pence from 440 pence a share, while ConocoPhillips’ target was lifted 21% to $160 a share. Among neutral-rated names, Chevron’s CVX
target was lifted 16% to $180, Exxon’s XOM
was lifted 12% to $110, Shell’s UK:SHEL

was boosted 9% to 2360 pence and Eni’s IT:ENI
was lifted 16% to 14. Repsol’s targets were lifted 3% to €17..

Note, Citi’s economists do see the global economy continuing to lose steam with the US tipping into recession by the third quarter of 2023 and Europe already there. The OECD also came out with its forecasts and not surprisingly, they were gloomy.

And they’ve got caveats for investors to consider when it comes to this dazzling sector. They say relative performance of energy stocks, while still positive, will start to diminish given that stocks have seen such a big run-up in 2022. Also, don’t get greedy, or “hold on too long,” said Syme and the team, who warned that when the demand-side collapse starts to really kick in, sector performance will start to suffer.

The markets


Stock futures ES00


are tilting a bit higher as bond yields slip and the dollar DXY
sweaters back. Oil prices CL

are slightly higher after Monday’s tumultuous session. Gold GC00
and silver SI00
prices are firmer, and bitcoin BTCUSD
is slightly higher at $15,776.

The buzz

Saudi Arabia delivered the first World Cup upset, beating Argentina 2-1.

Dollar Tree DLTR
shares are down after the retailer beat forecasts, but delivered downbeat guidance. Dell DELL
is dropping after the PC maker’s weak forecast overshadowed an earnings beat. ZM-Zoom
also delivered upbeat results, but shares are down on disappointing guidance. HP HPQ
will report after the close.

Baidu shares BIDU
are rising after the Chinese internet giant delivered forecast-beating revenue.

Lordstown Motors RIDE
and Nikola NKLA
are among several stocks that Goldman warns are burning through cash and may need to raise capital soon. The bank also points out that Microsoft has now overtaken Amazon as the stock with the most long hedge-fund positions.

Days after China President Xi Jinping spoke of redistributing wealth, HK:9618

said it would cut executive salaries by 10% to 15% to boost benefits for lower-level employees.

A speech from Kansas City Fed President Esther George is the only economic item of note for Tuesday.

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On the ever-busy crypto beat, comes this grim market-cap chart from @lanceroberts:


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Opinion: This record number in Nvidia earnings is a scary sight

Nvidia Corp.’s financial results had a bit of a surprise for investors, and not on the good side — product inventories doubled to a record high as the chip company gears up for a questionable holiday season.

Nvidia reported fiscal third-quarter revenue that was slightly better than analysts’ reduced expectations Wednesday, but the numbers weren’t that great. Revenue fell 17% to $5.9 billion, while earnings were cut in half thanks to a $702 million inventory charge, largely relating to slower data-center demand in China.

Gaming revenue in the quarter fell 51% to $1.57 billion. Nvidia said it is working with its retail partners to help move the currently high-channel inventories.

While the company was writing off the inventory for China, its own new product inventory was growing. Nvidia NVDA,
reported that its overall product inventory nearly doubled to $4.45 billion in the fiscal third quarter, compared with $2.23 billion a year ago and $3.89 billion in the prior quarter. Executives cited its coming product launches, designed around its new Ada and Hopper architectures, when asked about the inventory gains.

In the semiconductor industry, high inventories can make investors nervous, especially after the industry had so many supply constraints in recent years that quickly swung to a glut of chips in 2022. With doubts about demand for gaming cards and consumers’ willingness to spend amid sky -high inflation this holiday season, having all that product on hand just amps up the nerves.

Full earnings coverage: Nvidia profit chopped in half, but tweaked servers to China offset earlier $400 million warning

Chief Financial Officer Colette Kress told MarketWatch in a telephone interview Wednesday that the company’s high level of inventories were commensurate with its high levels of revenue.

“I do believe….it is our highest level of inventory,” she said. “They go hand in hand.” Kress said she was confident in the success of Nvidia’s upcoming product launches.

Nvidia’s revenue reached a peak in the April 2022 quarter with $8.3 billion, and in the past two quarters revenue has slowed, with gaming demand sluggish amid a transition to a new cycle, and a decline in China data-center demand due to COVID-19 lockdowns and US government restrictions.

For its data-center customers, the new architectures promise major advances in computing power and artificial-intelligence features, with Nvidia planning to ship the equivalent of a supercomputer in a box with its new products over the next year. Those types of advanced products weigh on inventory totals even more, Kress said, because of the price of the total package.

“It’s about the complexity of the system we are building, that is what drives the inventory, the pieces of that together,” Kress said.

Bernstein Research analyst Stacy Rasgon believes that products based on Hopper will begin shipping over the next several quarters, “at materially higher price points.” He said in a recent note that he believes Nvidia’s numbers were likely hitting a bottom in this quarter.

“We remain positive on the Hopper ramp into next year, and believe numbers have at this point likely reached close to bottom, with new cycles brewing and an attractive secular story even without China potential,” Rasgon said in an earnings preview note Tuesday.

Read also: Warren Buffett’s chip-stock purchase is a classic example of why you want to be ‘greedy only when others are fearful’

Nvidia Chief Executive Jensen Huang reminded investors on a conference call that the company’s inventories are “never zero,” and said everyone is enthusiastic about the upcoming launches. But it doesn’t take too long of a memory to conjure up a time when Nvidia went into a holiday with an inventory backlog that included new architecture and greatly disappointed investors: Four years ago, Huang had to cut his forecast for holiday earnings twice amid a “crypto hangover” with similar dynamics to the current moment

Investors need faith that this holiday season will not be the same, even as demand for some videogame products declines after a pandemic boom just as the market for cryptocurrency — some of which has been mined with Nvidia products — hits a rough patch. Huang said that Nvidia’s RTX 4080 and 4090 graphics cards based on the Ada Lovelace architecture had an “exceptional launch,” and sold out.

Nvidia shares gained more than 2% in after-hours trading Wednesday, suggesting that some are betting that this time will be different. That enthusiasm needs to translate into revenue for Nvidia so that this big gain in inventories does not end up being part of another write-down at some point in the future.