AI Mania, Emergency Lending, Leading Economic Indicators
June 2, 2023 | FIRESIDE CHARTS
AI mania is sweeping the stock market, propelling broad indices to near-term highs as breadth continues to narrow. While the banking crisis is over for now, the problems that sparked it haven’t gone away. Leading economic indicators are pointing towards weakness but as long as the labor market is intact the Federal Reserve may continue to increase interest rates. Dollar strength, higher mortgage rates, and lower oil. Remember to take unrevised economic data with a grain of salt.
1. Nvidia guided to a revenue increase of nearly 50% quarter-over-quarter as spending on AI infrastructure ramps up:
Source: The Daily Shot 5/30/2023
2. The market capitalization weighted S&P 500 has outperformed the equal weighted S&P 500 by roughly 10% over the past 13 weeks, the largest spread in at least 30 years:
3. Lending via the newly established Bank Term Funding Program (BTFP) continues to increase:
Source: The Daily Shot 5/30/2023
4. But total emergency lending has fallen:
Source: The Daily Shot 5/30/2023
5. Markets are forward looking but they’re not always right:
6. The Federal Reserve is expected to continue raising rates but at a much slower pace as they monitor incoming inflation data:
Source: The Daily Shot 5/31/2023
7. The U.S. Dollar is near the peak of its historical strength when adjusted for purchasing power parity (PPP) with other currencies:
Source: BCA Research
8. Higher rates will prevent momentum from building in the housing market as new homes remain the only game in town:
Source: The Daily Shot 6/1/2023
9. OPEC’s supply cuts failed to stop the downward trend in oil prices:
10. The rise in initial jobless claims in early-May was due to a surge in claims from Massachusetts which has since been corrected:
Source: Oxford Economics
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.