US tech is down, so that drags a lot of things down. Disappointing earnings calls from $SNAP, $MSFT and $TXN outweighed the solid call from $GOOG, and investors remain jittery before the Fed’s updated dot plot and Q&A session. $MSFT sales growth was ok yet it forecasted a slowdown in cloud computing which spooked folks. But, we note the massive cap ex line which may suggest that growth is on the horizon—they don’t typically spend that type of dough with no business in sight. Chipmakers fell in sympathy with $TXN, the biggest maker of analog semiconductors. $AMZN is down, not because of earnings, but because of whispers of a potential antitrust lawsuit. EZ losses were bigger, in part because of LVMH. Their print showed a slowdown in spending by US wealthy consumers. (To note, Unilever also commented on US softness, but obviously that is a different level of consumer). On the flipside, Visa $V had a solid print and guide. You can read through the stories here: Bloomberg and Bloomberg and Bloomberg and Politico.
Yes, you did! The forward P/E multiple for the S&P yesterday hit 20.0x at the peak. Today GS is telling people to buy $XLK puts. The P/E ratio climbed this high only 2x in the past 25 years: the Dot Com era, and pandemic accommodation bubble. To note, valuations went even higher than where they are today, but they also fell back down.
The Fed Funds Futures curve is estimating a 98% probability of a 25bps hike today, which would bring rates to their highest level in 22 years. It’s all about the press conference, of course, and the updated Dot Plot to swirl around the tea leaves. We don’t expect much because they’ll have 2 more months of data, roughly, before having to make the next call. The market is pricing in a pause in Sep and a 50/50 call for a hike in Dec. You can read all about it here: Bloomberg, FT, Politico.
ChatGPT downloads continue to decline, per Digital Info World/appfigures: “After striking the peak for a launch in May of this year, new stats are putting out a unique picture worth a mention. We’re talking about a fall in [ChatGPT] downloads by 58%. And as per estimated figures, the stats proved how the app struck a high with 387,000 downloads each day by May, and now, that’s just 162,000.”
Anthropic CEO Amodei is flagging that AI is much closer than people expect to being able to overtake human intelligence and produce weapons of mass destruction. (Anyone else read the story about how it can walk you, step by step, through the process of building weapons?) He is telling the Senate to wake up and pass legislation to stop these risks. McKinsey came out with research noting that women in the US have more to fear from AI than men do, because they hold more jobs in office support, customer services, etc. They are forecasting that at least 12mm US workers will need to switch occupations by the end of 2030, and women’s rate to men’s will be 1.5x.