Value Nvidia, not Huang

{"text":[[{"start":null,"text":""}],[{"start":7.893,"text":"Good morning. Nervous nellies about index concentration have some explaining to do. The one-time biggest stock in the hyper-concentrated S&P 500 has been absolutely crushed by something no one saw coming, and the index itself is fine — just chugging along sideways like it has for six months or so. Or did we just jinx it? Email us: unhedged@ft.com."}],[{"start":33.72,"text":"Jensen Huang is not the issue"}],[{"start":34.93,"text":"On October 29, The New York Times reported that Nvidia chief executive Jensen Huang was “seen as” a target of a Chinese spy plot. Two weeks later, he has resigned and the company has lost $1.1tn in value, a decline of about 22 per cent. Is the market putting too much value on the loss of one executive?"}],[{"start":56.812,"text":"Let us borrow a term from baseball analytics: wins over replacement (WAR). WAR is a measure of how many wins a player contributes to his team over and above an easily obtainable substitute player. What is the net present value of all the contributions Huang, had he avoided this scandal, was going to make to Nvidia, over and above the available replacement? Had he been hit by the proverbial bus on October 29, how much less would the company be worth run by someone else starting on that day — say, Colette Kress, the chief financial officer and now acting CEO?"}],[{"start":92.84,"text":"It is absurd to suggest Huang’s WAR was anywhere near $1.1tn. Nvidia is a huge, industry-leading, deeply entrenched company with one of the most valuable intellectual property portfolios in the world. One man’s leadership, charisma and vision cannot matter that much. What, for example, was Steve Jobs’ WAR for Apple? He was a towering leader who defined his company to an even greater degree than Huang did. And Apple has added $4.8tn in market capitalisation since Jobs died in 2011. At some point, the founder has added what they are going to add."}],[{"start":128.043,"text":"Unfortunately, Huang’s value as a CEO is not the main issue. What really matters is the damage his scandal has done. Nvidia, whose product is a national security issue, will no longer receive the benefit of the doubt from the US government or any other. Indeed, governments and customers might now see supporting the chip group’s competitors as a pretty good way to hedge their bets. And whoever does run the company now will have to spend a lot of time on damage repair, rather than winning in the marketplace. And on and on. Add it all up, and you might get to something like $1.1tn."}],[{"start":128.543,"text":"Jobs: stable ≠ strong"}],[{"start":168.303,"text":"Stable doesn’t necessarily mean good. The US jobless rate has been rangebound between 4.1 per cent and 4.3 per cent for eight months, and quite stable for close to two years — enough for Federal Reserve chair Kevin Warsh to argue that the employment side of the central bank’s mandate has been met."}],[{"start":186.401,"text":"Beneath the surface, however, signs show labour markets may have lost some of their dynamism, and that could have implications for longer-run monetary policy."}],[{"start":194.704,"text":"This issue was at the heart of a speech by Fed governor Christopher Waller this week. The job market, he said, is “best characterised as ‘low hire, low fire’.” Both lay-offs and quits — have been unusually subdued for more than a year, and they are below their long-term trend. His chart:"}],[{"start":null,"text":""}],[{"start":213.03,"text":"Waller said the causes are uncertain. An ageing workforce may mean fewer people switch jobs. The pandemic-era wave of job changes may have helped workers find better matches, leaving them less inclined to move again. And uncertainty around AI, tariffs and immigration may be making companies cautious about hiring. Low churn is less worrying if workers are staying because they have found good jobs. But if barriers or uncertainty are keeping people from moving, workers may be stuck in less productive roles — and the economy may be losing some of its capacity to grow without generating inflation."}],[{"start":248.44,"text":"The UK faces a similar problem. Bank of England deputy governor Clare Lombardelli describes a labour market “stuck in low gear”: people are changing jobs less often and, when they do, they’re less likely to move between industries or skill levels. Her chart shows that job switching is trending downwards:"}],[{"start":null,"text":""}],[{"start":266.412,"text":"The strain is especially visible in youth unemployment (15.6 per cent in the three months to August 2026), which is more than three times the overall rate (4.7 per cent)."}],[{"start":278.8,"text":"Lombardelli’s concern is that unemployment may now exert less downward pressure on wage growth than the headline rate implies. Jobseekers may lack the skills needed for the vacancies available, so they do not compete directly with workers in sectors where employers face shortages. Meanwhile, weaker mobility can hold back productivity and make it harder for the economy to adjust as technology changes the jobs on offer."}],[{"start":303.42,"text":"Low churn matters for central bankers because it blunts the signal they take from jobs data. Warsh may be right that labour markets are stable, but stable could just be another word for stuck."}],[{"start":303.92,"text":"One good read"}],[{"start":304.42,"text":"“Narrowness and relentless chill.”"}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":319.52,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794582920_1861.mp3"}