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This is an abridged transcript of the podcast.
Our top story so far in today’s session:
OpenAI – the maker of the popular ChatGPT chatbot – is reportedly under investigation by the U.S. government over consumer protection risks.
The FTC has opened an in-depth inquiry into OpenAI due to worries that it has violated consumer protection laws, according to The Washington Post. OpenAI is backed by billions of dollars from Microsoft (MSFT).
The FTC is asking for documents about the company’s data protection practices and whether the chatbot generates false information. OpenAI and Microsoft did not immediately respond to a request for comment from Seeking Alpha.
In March, OpenAI temporarily disabled the history feature on the service after some users reported seeing other users’ conversations. OpenAI has come under scrutiny for data protection around the world, including in Italy, after it was temporarily banned in the country. Service resumed in Italy in April after the company “addressed or clarified” the data protection and privacy requests of regulators.
Separately, in April the European Data Protection Board said that it had created a task force to look into ChatGPT.
Now a look at today’s trading, stocks are continuing their rally sparked by the CPI the day before. More good news on the inflation front is pushing equities up while rates slide.
The Nasdaq (COMP.IND) is up around 1%, the best performer for the second day in a row as the S&P (SP500) and Dow (DJI) also climb.
The June PPI rose 0.1%, less than the 0.2% expected. Annually, the PPI rose just 0.1%, much less than the forecast for 0.5%. Core PPI, also rose 0.1% vs. 0.2% expectations. That’s up 2.4% annually, well lower than the 2.8% forecast.
Liz Ann Sonders of Schwab put it succinctly: “Disinflation carries on.”
Initial jobless claims fell unexpectedly, but continuing claims rose.
Silver (XAGUSD:CUR) is higher and gold (XAUUSD:CUR) is slightly up.
TD Securities strategist Bart Melek says silver should hit $26 per ounce by year-end ahead of the Federal Reserve pivoting to a more dovish rate stance in 2024. TD sees silver prices beating the average market consensus in Q4 by about $2 per ounce as firmer physical investment tightens supply-demand fundamentals.
Among stocks to watch, Delta Air Lines (DAL) shot up after a strong earnings report and a boost to its full-year profit guidance.
The carrier generated record operating revenue of $14.6 billion during the quarter. That was up 19% from a year ago. Domestic segment revenue was up 8% to $8.94 billion. Atlantic segment revenue rose 22% and the Latin America segment revenue was up 16%. Total unit revenue per available seat mile was up 1% on 17% higher capacity driven by improved load factors and yields.
We had some inquiries about Delta’s earnings from the previous podcast and I want to point out that we have earnings previews for all the major stocks on our site. Just type in the ticker when you hit the Seeking Alpha homepage.
PepsiCo (PEP) topped earnings estimates and posted solid guidance for the full year. Organic sales rose 13% in Q2, led by a 19% increase in Latin America and an 18% rise in the Africa, Middle East and South Asia region. Organic sales were 10% higher for PepsiCo Beverages North America and 14% higher for Frito-Lay North America.
Plug Power (PLUG) announced an order for 100 megawatts of proton exchange membrane electrolyzers from an unnamed company. Plug said it is “the largest announced project in the oil and gas sector in Europe,” but it did not provide financial terms or identify the purchaser.
In other news of note, Hollywood is gearing up for the first double strike of writers and actors since 1960. Contract negotiations between a union representing 160,000 actors and major studios failed.
Actors are now set to join writers, who have been on the picket lines for more than two months, over demands such as higher pay, better working conditions and guardrails for AI use. AI looks like the sticking point.
The Screen Actors Guild – American Federation of Television and Radio Artists voted unanimously to recommend a strike. Its national board will vote Thursday morning on whether to strike.
The union said “After more than four weeks of bargaining, the Alliance of Motion Picture and Television Producers remains unwilling to offer a fair deal on the key issues that are essential to SAG-AFTRA members.
In the Wall Street Research Corner –
As the rally in U.S. stocks continues, hedge funds are already looking for the next big thing.
Hedgies are cutting their investments in U.S. stocks market and shifting their focus to Europe due to concerns about the sustainability of the narrow Wall Street rally.
The Goldman Sachs prime brokerage team says s that hedge funds currently have the lowest exposure to the U.S. stock market since 2013. They are also increasing their investments in European stocks to record levels, according to data from the FT.
Antipodes Partners investment director Alison Savas says megacaps are starting to look overvalued. She has 30% exposure to Europe and says she struggles to justify the high valuations of many U.S. tech businesses. Instead she is looking to mispriced European multinationals that “are priced at a discount to similar businesses in other markets.
Read the full article here
