Are We Seeing Market Recovery Or The Last Burst Of Hope Before The Real Trouble? Also, It's Already Too Late To Stop AI | (1.24.23)
“Real risk with AI isn’t malice but competence. Superintelligent AI will be extremely good at accomplishing its goals, and if those goals aren’t aligned with ours, we’re in trouble.” –Stephen Hawking
What You Need To Know Today:
• This morning S&P Global published the latest “flash” reading of the Purchasing Managers' Index (PMI), which is derived via a survey of approximately 400 U.S. purchasing managers asking them to rate the relative level of current business conditions including aspects such as production, prices, new orders, inventories, and employment. For added context, an index level above 50 indicates expansion, whereas a reading below 50 indicates contraction. While this data is reported monthly, there are two versions (1) Flash & (2) Final. Generally, the flash release, which comes out first, has the most impact on the market as it provides the first look into business sentiment. Today’s reading came in at 46.6 — beating the pre-release market expectation of 45.3 but still indicating that purchasing managers believe that business conditions are continuing to contract (worsen).1
TL;DR — Sentiment among purchasing managers is better than anticipated, but still signaling contraction.
• For the better part of the past year economists, journalists, realtors, mortgage brokers, and investors have been talking about recession in the United States. In fact, according to Bloomberg, the word “recession” appeared in more than 650,000 news headlines throughout 2022 — with volume peaking back in July.2 However, despite all of the doom and pessimism that was (and continues to be) in the news, we have not yet seen the massive downturns that would be expected. Does this mean that it’s not coming? Well…. also according to Bloomberg, if you look at historical data (specifically regarding equities) there has often been a last S&P 500 bounce before the market sold off as the economy really went to pieces. One “final hurrah” if you will. Could this be what we are seeing right now? Another push upwards before the past Federal Funds Rate hikes catch up with the market? It certainly doesn’t seem to be out of the question…
TL;DR — The market might have lulled us into a false hope that the current upward momentum is “recovery” rather than just a “last hurrah” bounce.
Chart Of The Day:3
ChatGPT (allegedly) rolled out a trial “pro” version this week that will reportedly cost users ~$42/month. I say allegedly because although users have reported access, OpenAI has not yet confirmed it to be true. Either way, the push for monetization should be surprising to no one as it appears the tool reached 1,000,000 active users faster than any other platform in the history of the internet. For those paying close attention, it is easy to see that we are only getting a glimpse of what is to come for CharGPT and similar AI technologies. The world of information will likely look VERY different over the next few years…
TL;DR — AI isn’t coming… it has arrived.
Poll Of The Day:
Source: Bloomberg — Don’t Get Disoriented by Recession-Talk Fatigue.
Source: Statista — ChatGPT Sprints to One Million Users.