Market Performance: February 22, 2024.

Nvidia (NVDA.O), opens new tab added $277 billion in stock market value on Thursday, Wall Street's largest one-day gain in history after the heavyweight chipmaker's quarterly report beat expectations and reignited a rally fueled by optimism about artificial intelligence.

The company's stock soared 16.4% to close at $785.38, a record-high close, lifting its market capitalization to $1.96 trillion after its January-quarter report late on Wednesday showed demand for its specialized chips used in AI computing continued to outpace analysts' already-high expectations.

The Santa Clara, California-based company's results fed new fuel to a global rally in technology stocks linked to AI, propelling the S&P 500 (.SPX), opens new tab, Europe's STOXX 600 (.STOXX), opens new tab and Japan's Nikkei share average (.N225), opens new tab to record highs.

Home equity hazards: The risks of tapping into your property’s value

Home equity loans can help homeowners take advantage of their home’s value to access cash easily and quickly. Borrowing against your ownership stake could be worth it if you’re confident you’ll be able to make payments on time, and especially if you use the loan for improvements that increase your home’s value.

However, there are several caveats to be considered with these loans. While all loans come with some level of risk, of course, the fact that home equity financing is a type of secured debt — secured by your home, to be precise — means you should approach it with an additional layer of caution.

Risks of home equity loans 

There are two main types of loans that use your home equity as collateral: home equity loans and home equity lines of credit (HELOCs). Here’s what can happen with both or one of them.

Your home is on the line

The stakes are higher when you use your home as collateral for a loan. Unlike defaulting on a credit card — whose penalties amount to late fees and a lower credit score — defaulting on a home equity loan or HELOC could allow your lender to foreclose on it. There are several steps before that would actually happen, but still — it’s a risk.

Home values can change

With mortgage rates on the rise, the steeper cost of borrowing and resulting higher monthly mortgage payments have dampened buyer enthusiasm.

As a result, home price growth has stagnated, and even fallen in some places.

Modern Monetary Theory (MMT): Definition, History, and Principles

What Is Modern Monetary Theory?

Modern monetary theory (MMT) is a heterodox macroeconomic supposition that asserts that monetarily sovereign countries (such as the U.S., U.K., Japan, and Canada) which spend, tax, and borrow in a fiat currency that they fully control, are not operationally constrained by revenues when it comes to federal government spending.

Put simply, modern monetary theory decrees that such governments do not rely on taxes or borrowing for spending since they can print as much money as they need and are the monopoly issuers of the currency. Since their budgets aren’t like a regular household’s, their policies should not be shaped by fears of a rising national debt.

Several other differences also exist between mainstream monetary theory and modern monetary theory, the most important being the sequence of events that emerges from loans and deposits, and from government spending and taxes.

Core Principles of Modern Monetary Theory (MMT)

The central idea of modern monetary theory is that governments with a fiat currency system under their control can and should print (or create with a few keystrokes in today’s digital age) as much money as they need to spend because they cannot go broke or be insolvent unless a political decision to do so is taken.

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