Why the AI stock rally isn’t another meme craze (2 min read)
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The latest stock rally in AI tool companies is somewhat justified, unlike the meme stock frenzy in 2021 and 2022. The market opportunity for AI and the sound fundamentals of companies innovating makes it different from the themes that drove meme stocks. Microsoft’s AI browser announcement sent its stocks 12% higher. AI companies releasing new tools have seen its shares up in triple digits. Google is the only one with its stocks falling after introducing AI initiatives as investors saw Alphabet as suddenly behind Microsoft in the AI race.

Lyft shares tank 30% after company issues weak guidance (2 min read)

Shares of Lyft fell more than 30% in extended trading on Thursday after the company issued weak guidance for the current quarter. Lyft expects to make about $975M in revenue in Q1, which is lower than the $1.09B analysts anticipated. It reported a net loss of more than doubled from a year ago. The number of active riders also remained flat quarter-over-quarter and still below the pandemic levels. Meanwhile, Uber recently reported the strongest quarter ever with revenue up 49% year-over-year and an all-time high number of active drivers.

JPMorgan CEO says too early to declare victory against inflation (3 min read)
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JPMorgan CEO, Jamie Dimon, warns against declaring victory over inflation too soon, as the Fed could raise interest rates above 5% if higher prices persist. US Inflation in December has fallen to 5%, but it’s still above the 2% target. Dimon said that if inflation stays at 3.5% to 4%, rates may have to go even higher, which will affect short and longer rates. He also warns that stricter regulation of credit card fees may lead to less credit being extended, and that a US debt default could be catastrophic for the country.

U.S. weekly jobless claims increase, labor market remains tight (3 min read)
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US jobless claims have risen for the first time in 6 weeks but remain historically low, showing the resilience of the job market despite economic uncertainty. Continuing claims rose to 1.69 million, as firms struggle to hire workers, despite many businesses cutting jobs. The data supports the Fed's stance for more interest rate hikes to combat inflation. A recent survey found that 57% of CEOs are having problems attracting qualified workers, with 81% expected to increase wages by at least 3% over the next year. Despite fears of a recession, the tight labor market persists.

ETFs Concealing Billions of Dollars of Insider Trades (4 min read)

A recent academic paper warns of "shadow trading" in ETFs by insiders with non-public information to conceal their trades. The study estimates $2.75B in shadow trades via ETFs between 2008 and 2021, averaging $212M a year. The authors argue that ETFs are attractive for insider trading as they are subtle, cost-effective, and liquid. Regulators and law enforcement remain focused on direct stock trading, but the paper warns that the total amount of insider trading may be underestimated if only direct forms are considered.

Zero Fee ETF Crosses $1B In AUM for First Time (4 min read)
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The BNY Mellon US Large Cap Core Equity ETF (BKLC) jumped in assets from $500 million to $1.7 billion and became the largest zero-fee ETF. The SoFi Select 500 ETF (SFY) was previously the largest in this space, but BKLC eventually caught up after launching a year later. The difference between no fees and a low expense ratio is minimal, but zero-fee ETFs have become more attractive to investors seeking lower costs. The motive for these zero-fee ETFs is to bring customers into their ecosystems where they might purchase more profitable products.

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Thanks,
Thomas

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