This week (especially if you include the US session from last Friday) could have felt like a vindication for all AI skeptics.
Mag7 stocks lost US$650B early week and while losses are sure to be pared (hedge funds were busy buying the dip this week,) we’ve seen the first real big obstacle hit the latest intoxicating thematic from Silicon Valley – “Artificial Intelligence,” or, a very well-trained web crawler, depending on how you squint.
While the dramatic sell-off was borne within a larger more macro-panic context (read: US recession fears are vogue again,) it can’t be denied that within the zeitgeist we’ve seen a real re-evaluation of tech stock momentum, namely, whether or not the AI revolution has been vastly overplayed. That goes equally for those with and without vested interests.
After all, in the two years since ChatGPT suddenly became the gold standard, we haven’t really seen any economy’s productivity magically increase. Two years ago, forecasts for near-term disruption were far more bold in their imagination.
What we’ve really got is a web-based program that’s quite good at neatening sloppy HTML code and has real valuable benefits for translation applications between speakers of different languages. So there’s that. But looking further beyond, all you see is lawsuits, a sea of wacky but somehow uninspiring images and videos, and plagiarism scandals. One to keep watching.
Talking of lawsuits: the US is investigating NVIDIA over competition concerns, and a court has ruled that Alphabet’s dominance of web search (via flagship product Google) is illegal. The latter case has more people worried than the former; UBS analysts have said they’re waiting and watching carefully before changing estimates.
One easy way Google is perceived to be able to break its monopoly is to stop making its search engine default on Apple devices. That deal earns Apple billions of dollars, meaning the Macintosh maker could be in for more disaster after Buffet, probably the world’s most watched investor, sold half his stake. (In fact, Warren Buffet isn’t really in too many stocks right now.)
Then there was Japan. Stocks shed a historical -13% on Monday, by the end of the Asian session on Tuesday, they had staged a historic +10% bounceback. That hasn’t been seen in recent memory, and the stage was further coloured by the Bank of Japan telling forex traders the central bank wouldn’t raise interest rates as long as the Yen remained volatile. That basically gave way to traders to sell off the Yen, meaning that now currency markets might just deliberately go haywire right before scheduled decisions.
At home, we got the RBA decision this week, and in line with market expectations, rates were kept on hold. Whether or not we can write off the risk of another hike later this year – or next year – remains to be seen.
Local Stocks & Economy
- Treasurer Chalmers disputes RBA’s Bullock on gov’t spending boosting inflation
- Chris Bowen accuses Meta of removing pro-renewables articles from FB
- ASX lost $160B across last Friday and Monday this week
- WA EPA blocks Woodside’s Browse; potentially next biggest gasfield
International Economies
- Bof Japan basically tells forex traders they influence interest rate decisions
- Goldman Sachs boss Solomon says US economy likely to avoid recession
- NZ unemployment rises to 4.6% – but unlikely to echo to Australia
International Stocks
- Mag7 stocks lose US$650B in value early week
- Nikkei falls nearly -13% on Monday as US recession fears define early-week…
- But bounces back +10% on Tuesday as traders gauge overreaction
- Alphabet ruled to be acting illegally when it comes to Google search dominance
- Apple slammed as the big Buffet sells off around half of all shares
Geopolitics
- JP Morgan says remilitarisation of the world could hurt 2% inflation targets
- Biden reportedly warned Iran, Lebanon preparing two-wave attack
- Attack on US base in Iraq further strains MidEast landscape on Tuesday
- Trump re-election prospects are putting the fear into US EV investors; record outflows hit