Hello team! Phil Rosen here, writing to you from New York.
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1. The excitement around ChatGPT, AI, and related tech stocks is old news now, but Wall Street can't stop talking about it.
The business world has been single-minded when it comes to AI, and that's led to strong stock performances for once-little-known names like C3.ai, as well as giants like Nvidia.
But all the hubbub may actually be obscuring some serious risks to the US economy, as my colleague Zahra Tayeb writes.
The Federal Reserve has raised interest rates, for example, by 500 basis points in 15 months — the steepest trajectory in decades. Benchmark rates are currently hovering at the highest mark since 2007, just before the global financial crisis began.
The Fed's own recession probability model shows there's a 70% chance of a downturn by this time next year.
Some investors are also concerned that elevated borrowing costs could soon bring pain to stocks, especially if the central bank makes another rate hike or two. Elon Musk, Nouriel Roubini, and a chorus of Wall Street firms have issued dire warnings.
But the tech sector's strength over recent months — thanks to AI — seems to have muted fears of a recession. That could be a big blind spot.
"Given all other things being equal, such a scenario will likely trim corporates' budgets and demand for technology hardware and software upgrades that could put a dampening effect on the current bout of AI optimism," OANDA analyst Kelvin Wong wrote in a recent note.
Outside the US, too, there's reason for concern.
China's massive economy is facing a bleak growth outlook and a weaker-than-expected pandemic rebound.
The country's slowing trade, weak industrial production numbers, and piling debt all ultimately present problems for Wall Street, which may be catching on to the risk.
The S&P 500 just posted a losing week after five straight weeks of gains. The Nasdaq also had a negative week, ending an eight-week winning streak.
What do you see as the connection between economic troubles and AI hype? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.
In other news:
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2. US stocks futures slip ahead of Monday's opening bell, with investors weighing up how the Wagner Group's challenge to Vladimir Putin could impact markets. The US dollar also fell, but the price of fellow safe haven gold edged up. Check out the latest market moves.
3. Earnings on deck: Biogen Inc and Carnival plc and more, all reporting.
4. A 20-year fund manager veteran shared which mega-trend stocks he's betting on now. Gary Black's top picks are based on fundamentals, management teams, and customers. These are the eight names he likes most — and the five he's shorting.
5. Argentina's dollar reserves hit their lowest level since 2016. Now companies in the country are turning to the yuan to purchase imports — and a top US manufacturer may join the trend.
6. Goldman Sachs forecasted that China could replace the US as the world's largest economy by 2035. Not only that, but economists think emerging-market stocks will eventually make up a bigger share of the global landscape than the US by that time.
7. Shares of famous artwork are going public for the first time. One high-profile piece is expected to draw $55 million for its IPO. Full details.
8. Harvard researchers shared seven charts that show the struggles of buying and renting a home in America today. The university experts broke down why affordability remains historically low, and the handful of factors that have aligned to make it one of the worst home-buying environments in decades.
9. Meet a fund manager who beat 93% of his peers last year. He shared his eight favorite stocks across various sectors — and explained why four key indicators could signal the end of 2023's market rally.
Markets Insider
10. A prominent Tesla bull said the stock could soon see a setback after its strong 2023 performance. Morgan Stanley's Adam Jonas slashed his Tesla rating at the end of last week — and warned that earnings could slide amid Elon Musk's price war.
Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email prosen@insider.com.
Edited by Jason Ma in Los Angeles and Jack Sommers (@jack_sommers) in London.
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