Economist David Rosenberg warns that the AI stock surge has become a distraction from recession risks and resembles the dot-com
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2023-05-30 | Sign Up | View Online
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S&P 500 4,205.45 +1.30%
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Markets & Economy
An unexpected increase: Fed’s favorite inflation measure heated up last month (2 min read)

Inflation in the US has shown signs of increasing turbulence, with the Personal Consumption Expenditures (PCE) price index rising by 4.4% annually in April, up from 4.2% in March. The core PCE index, excluding food and energy prices, unexpectedly rose by 4.7% year-on-year. Economists had predicted a steady rate of 4.6%. Both indexes also saw a monthly increase of 0.4%. These figures, along with higher-than-expected consumer spending, have raised the likelihood of further interest rate hikes by the Fed.
Biden, McCarthy reach final deal to prevent default, now must sell to Congress (5 min read)

President Joe Biden and House Speaker Kevin McCarthy have reached a final agreement to raise the US debt ceiling, just days before the default deadline. The deal will be presented for votes to Congress this week in hopes of a bipartisan agreement. The compromise includes provisions such as spending cuts, increased work requirements for food stamp recipients, and changes to environmental reviews. The days ahead will determine if the US default and a potential global economic crisis can be avoided.
Business & Stocks
‘Price bubble’ in A.I. stocks will wreck rally, economist David Rosenberg predicts (2 min read)

Economist David Rosenberg warns that the AI stock surge has become a distraction from recession risks and resembles the dot-com bubble in the 1990s. Stocks like Nvidia, Alphabet, Microsoft, and Palantir have seen significant gains but he believes they are overextended. He notes that the S&P 500 breadth measures are the worst since 1999, with only a few mega-cap tech stocks driving the market. Meanwhile, sectors like banks, consumer discretionary, and transports show similar trading patterns as the previous recession.
Ford EVs will use Tesla charging tech in surprise partnership between rival automakers (3 min read)

Ford Motor and Tesla have announced a rare partnership to collaborate on charging initiatives for electric vehicles (EVs). As part of the agreement, current Ford owners across the US and Canada will gain access to Tesla Superchargers through an adapter starting in 2024. Ford’s 2025 EVs will also incorporate Tesla's charging plug that allows owners to charge at Tesla Superchargers without an adapter. Ford is the first automaker to have this integration and it aims to support Ford's efforts to boost its EV production and compete with Tesla in the market.
Funds & ETFs
Heavy Lift: S&P 500’s Biggest Stocks Carrying the Rest (2 min read)

A small number of stocks have significantly influenced the performance of the broader US stock market in 2023, which may be a misleading impression of its overall health. Motley Fool recently reported that just the top 10 stocks have driven 90% of the S&P 500's returns this year. This article highlights various types of S&P 500 ETFs and suggests analyzing them in conjunction with the S&P 500 can offer a different perspective on the index’s performance.
Cathie Wood’s ARKK Dumped Nvidia Stock Before $560 Billion Surge (3 min read)

Cathie Wood's flagship ARK Innovation ETF (ARKK) sold its stake in Nvidia before the stock's surge, missing out on its subsequent $560 billion increase in market capitalization. Wood had expressed concerns about Nvidia's valuation earlier in the year when the stock was trading at around $234 per share. Although Wood still holds Nvidia in some of her smaller funds, investors in the ARKK have not benefited from the stock's rally and the fund lacks exposure to AI-linked stocks that have performed well this year.
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