Microsoft reportedly plans to invest $10 billion in OpenAI (2 min read)
OpenAI is the startup behind the popular A.I. tool ChatGPT. It is a chatbot with the ability to interact in conversational dialog and provide responses that can appear surprisingly human. Microsoft plans on investing $10 billion in OpenAI and will get 75% of the company’s profit until it makes back the money on its investment. ChatGPT can help Microsoft boost its efforts in web search and dilute the dominance of Google by offering more advanced search capabilities.
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Bed Bath & Beyond reports wide loss but stock surges (3 min read)
Bed Bath & Beyond reported a bigger than expected quarterly loss on Tuesday. The company’s net loss increased 42% and net sales declined 33% from a year ago. CEO Sue Gove said they are actively working on measures to cut costs, which include layoffs and closing stores. Just days earlier, the company warned of potential bankruptcy as it is at risk of running out of money to cover expenses and struggles to attract customers. Despite all the negative news, shares of Bed Bath & Beyond were up more than 27% on Tuesday.
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Jamie Dimon says Fed 'may very well' raise interest rates to 6% (3 min read)
Jamie Dimon expects the peak interest rate to be 6%, higher than the 5% most are anticipating. He is not convinced that 5% is enough to bring inflation down to where it needs to be. However, he believes the Fed should pause the hike once it reaches 5% to assess the lagging impact on the economy. He correctly predicted last year that the Fed will hike rates six to seven times when the market only expected three to four hikes.
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This May Be the Longest Bear Market in History (6 min read)
Most market corrections in the past did not take long to find their respective bottoms. Since this century began, it takes an average of about 15 months for the S&P 500 to find its bottom after the Fed begins an interest rate easing cycle. The current concern is that the Fed is nowhere near an easing cycle which may suggest that the market is still a long way from the bottom. During a potential lengthy bear market, it might be wise to hold dividend stocks or defensive sectors.
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Buffered ETFs’ $10 Billion Year (5 min read)
Defined outcome or buffered ETFs pulled in about $10 billion in total last year, doubling the assets for most issuers in this space. The primary driver for popularity is because there was so much market uncertainty in 2022. Buffered ETFs are essentially a hedge that offers protection on the downside in exchange for limited upside returns. Given the outlook for 2023 remains mostly shaky, asset flows in buffered ETFs will likely stay strong.
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New ETF Bets on Female CEOs (3 min read)
Hypatia Capital launched a new ETF that aims to prove female leadership can deliver better business results. The Hypatia Women CEO ETF (WCEO) was launched on Monday and it tracks the performance of US companies with a minimum market capitalization of $500 million that are led by female CEOs. Women leadership-focused funds is a niche sector that emerged in recent years. Currently there are only about three available in the US.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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