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Bonds Are Back as a Hedge After Failing Investors for Years 2024-08-12 05:37:00+00:00 - (Bloomberg) — Gregg Abella, a money manager in New Jersey, wasn’t expecting the flood of phone calls he got from clients this past week. “Suddenly people are saying to us, ‘Wow, do you think it’s a good time for us to add bonds?’” Most Read from Bloomberg It’s something of a vindication for Abella. He’s been, in his words, “banging the gong” for bonds — and asset diversification, more broadly — for years. This was long a decidedly out-of-favor recommendation. Until, that is, stocks started to tumble this month. Quickly, demand for the safety of debt soared, driving 10-year Treasury yields at one point early last week to the lowest levels since mid-2023. The rally has surprised many on Wall Street. The age-old relationship between equities and bonds — wherein fixed-income offsets losses when stocks slump — had been thrown in doubt in recent years. Especially in 2022, when that correlation totally collapsed as bonds failed to provide any protection at all amid the slide in stocks. (US government debt, in fact, posted its worst losses on record that year). But whereas the selloff back then was triggered by an inflation outbreak and the Federal Reserve’s scramble to quell it by ratcheting up interest rates, this latest equities slump has been sparked in large part by fear the economy is slipping into a recession. Expectations for rate cuts, as a result, have mounted fast, and bonds do very well in that environment. “Finally the reason for bonds is shining through,” said Abella, whose firm — Investment Partners Asset Management — oversees about $250 million including for wealthy Americans and nonprofits. As the S&P 500 Index lost about 6% across the first three trading days of August, the Treasury market posted gains of almost 2%. That enabled investors with 60% of their assets in stocks and 40% in bonds — a once time-honored strategy for building a diversified portfolio with less volatility — to outperform one that merely held equities. Bonds would eventually erase much of their gains as stocks stabilized over the past few days, but the broader point — that fixed income worked as a hedge at a moment of market chaos — remains. “We’ve been buying government debt,” said George Curtis, a portfolio manager at TwentyFour Asset Management. Curtis actually first began adding Treasury bonds months ago — both because of the higher yields they now offer and because he too has expected the old stock-bond relationship to return as inflation receded. “It’s there as a hedge,” he said. Story continues Inverse Again There’s another way to see that the traditional, inverse relationship between the two asset classes — which mostly held for the first couple decades of this century — is back, at least for now. The one-month correlation between stocks and bonds last week reached the most negative since the aftermath of last year’s regional-bank crisis. A reading of 1 indicates the assets move in lockstep, while minus 1 suggests they move in the opposite direction. A year ago, it eclipsed 0.8, the highest since 1996, indicating bonds were practically useless as portfolio ballast. The relationship was turned on its head as the Fed’s aggressive rate hikes beginning in March 2022 caused both markets to crater. The so-called 60/40 portfolio lost 17% that year, its worst performance since the global financial crisis in 2008. Now the backdrop has shifted back in favor of bonds, with inflation more in check and the focus turning to a potential US recession at a time when yields are still well above their five-year average. The coming week brings plenty of risk for bond bulls. July reports are due out on US producer and consumer prices and any sign of a resurgence in inflation could push yields back up. They already began ticking higher on Thursday after weekly jobless claims — a data point that’s suddenly gaining attention as recession concerns swirl — surprisingly fell, tempering signals that the labor market is weakening. For all the excitement about bonds today, there are still lots of people like Bill Eigen who are leery of jumping back into the market. Eigen, who manages the $10 billion JPMorgan Strategic Income Opportunities Fund, has held more than half of it in cash — mostly in money-market funds that invest in cash-equivalent assets such as Treasury bills —— for the past few years. At just over 5%, short-term T-bills yield at least a full percentage point more than long-term bonds, and Eigen’s not convinced that inflation is truly tame enough nor the economy weak enough to merit the kind of Fed easing that would change that dynamic. “The rate cuts are going to be small and incremental,” he said. “The biggest problem for bonds as a hedge is that we still have an inflationary environment.” What Bloomberg Intelligence Says “The yield curve tends to bull steepen going into a recession. The exceptionally brief uninversion of the 2-year/10-year Treasury curve on Aug. 5 could presage a bull-steepening trend that we expect to persist as the economy slows. Meanwhile, we think the equity/bond correlation may be normalizing.” —— Ira F. Jersey and Will Hoffman, BI strategists Perhaps. But a growing number of investors have, like Curtis, relegated inflation to a secondary concern. During the height of last week’s market volatility, bond investors sent a fleeting message that their worries about growth were becoming dire. Yields on two-year notes briefly traded below those on 10-year bonds for the first time in two years, an indication the market was bracing for recession and rapid rate reductions. “With inflation trending lower and with risks much more balanced or even tilted towards concerns about more significant economic slowing, we do think bonds are going to exhibit more of their defensive characteristics,” said Daniel Ivascyn, chief investment officer at Pacific Investment Management Co. What to Watch Economic data: Aug. 12: New York Fed 1-year inflation expectations; monthly budget statement Aug. 13: NFIB small business optimism; producer price index Aug. 14: MBA mortgage applications; consumer price index; real average earnings Aug. 15: Empire manufacturing; retail sales; Philadelphia Fed business outlook; jobless claims; import and export price index; industrial production; capacity utilization; manufacturing (SIC) production; business inventories; NAHB housing market index; TIC data Aug. 16: Housing starts; building permits; NY Fed services business activity; University of Michigan sentiment Fed calendar: Aug. 13: Atlanta Fed President Raphael Bostic Aug. 15: St. Louis Fed President Alberto Musalem; Philadelphia Fed President Patrick Harker Aug. 16: Chicago Fed President Austan Goolsbee Auction calendar: Aug. 12: 13-, 26-week bills Aug. 13: 42-day cash management bills Aug. 14: 17-week bills Aug. 15: 4-, 8-week bills —With assistance from Michael Mackenzie. Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.
The stock market is entering a prolonged period of chaos — and that's a good thing 2024-08-12 01:47:00+00:00 - Getty Images; Alyssa Powell/BI Global markets had an acute panic attack this week — a sudden bout of chaos in what has been otherwise a rather placid and predictable year. The dizziness started in Asia: Markets crashed in Japan early Monday, with the headline Nikkei index falling by as much as 12.4%. The trembling then spread across the globe as cryptocurrencies — supposedly an uncorrelated store of value — experienced a temporary loss of control, plummeting along with everything else. By the end of the day it was clear that US stock markets could not catch their breath. Fully untethered from reality, hearts palpitating wildly up and down Wall Street, the Dow Jones Industrial Average closed down more than 1,000 points, a 2.6% drop, while the tech stock-heavy Nasdaq tanked by 3.4% and the S&P 500 sank 3%. In the days that followed, the market jumped or fell with each new piece of information, leading to a distinct tightness in every investor's chest. As with any panic attack, the reasons for its sudden onset are myriad — a compounding of long-known anxieties both in and out of our control. After the Bank of Japan hiked interest rates, the Japanese yen appreciated suddenly, scrambling the carry trade, a popular Wall Street strategy that had been paying off for years but requires placid markets to sustain itself. Added on top were concerns about Big Tech, the backbone of 2024's roaring market. After wrapping up earnings season with little profit to show for investments in AI, worries that companies wasted $1 trillion on this nifty but unproven tech went from whispers to open debate. Most important, though, was the market's painful processing of the July jobs report, which showed that the US added just 114,000 new jobs last month, well below economists' expectations. The main reason for the market's tranquility this year was the strong conviction that America's battle with inflation would end with a soft landing, an ideal scenario where prices come back under control without a surge of job losses. The recent uptick in unemployment — which rose to 4.3% in July — forced Wall Street to accept that its perfect economic scenario is at risk and that the Federal Reserve, which has been focused on getting inflation under control, may be behind the curve on cutting interest rates to support the labor market. It was enough to send the market into a full-on tantrum. A soft landing remains Wall Street's base case. Fed Chairman Jerome Powell is likely to step in to boost the economy in September. And it is probable that the recent weakness in the job market is just a level setting back to a more sustainable existence. But even a little doubt can be pernicious for finance, a world ruled by probabilities. After a rather long absence, fears that the US economy could tip into recession came back into view, which caused the people of markets — from the macro traders to the stock jockeys — to panic. Story continues All this bedlam is a warning that a new era is approaching. The inflationary post-pandemic economy is fading, and something new will soon replace it. We do not know if that regime will reward growth or value stocks, whether it will send money flows back to Japan or to Mexico. We do not know this new economy's structure — only that it will be slower than what we're experiencing now and perhaps more "normal" than anything we've seen since the 2008 financial crisis. The plan is to return to a 2% inflation rate and a 2% benchmark interest rate. Exactly how we get there — through a soft landing or after a recession — is the question that will have markets convulsing between fresh data prints and central-bank announcements until we reach our destination. It may be a turbulent ending, but at least it's in sight. There are levels to this, man The signs that the economy is slowing are neither unexpected nor unintended. They are part of our recovery from the pandemic. In the face of an economy so hot that both wages and prices shot up uncomfortably, the Fed jacked up interest rates from 0% to 5.25%. The explicit intention was to tap the brakes, slow consumer spending, and get businesses to ease up on some of their hiring. This put Wall Street in "bad news is good news" mode — so-so economic data was proof that higher rates were actually slowing things down, and over the past year, investors got plenty of proof. The consumer price index continued its downward trend in June, coming in at 3%, just above the Fed's 2% target. Fewer and fewer Americans quit their jobs as they became less confident that they'd immediately find new ones. Wages kept rising, but more slowly, which means prices could stabilize. The more leisurely pace of growth kept the stock market rolling along merrily. Consumers still had money to spend, and after hiking prices during the pandemic, corporates enjoyed record profits. On August 1, the day before the jobs report dropped, the S&P 500 was up 11.8% for the year, while the Nasdaq and the Dow had gained 9.1% and 7%. While there was some demand for protection against the prospect of volatility reemerging, overall sentiment across Wall Street had gotten more bullish. "We're not seeing a ton of demand for downside protection," Mandy Xu, Cboe's head of derivatives-market intelligence, told me at the end of last month. She added that, for the most part, Wall Streeters were making a lot of bets that the market would go up. When everyone starts betting in the same direction, it gets lopsided. The sudden reassessment after the jobs report not only caught many investors on Wall Street offside but changed the entire market's tenor — bad news is now bad news. A slowing economy is what policymakers and investors wanted to see, but not one so slow that it could hurt the jobs market or, in the worst case, tip the economy into a full-on recession. The question is whether we are in the former kind of slowdown and not the latter. If you dig deeper into recent economic data, there's a strong case for the US being in a kinder, more forgiving slowdown. The July jobs report showed wage growth at 3.6% year over year, meaning people are still getting raises even when adjusting for inflation. Over at Apollo Global Management, Torsten Slok, the chief economist, argued to clients that the "source of the rise in the unemployment rate is not job cuts but a rise in labor supply because of rising immigration." In other words, there is no sudden surge in layoffs, just more demand for jobs. In another note to clients on Tuesday, Slok noted that the rate of borrowers defaulting on risky loans has declined over the past year — not what you would expect to see ahead of a recession. Until Americans lose their jobs, consumers will keep spending. As long as consumers keep spending, the US economy can stay on track. The problem is uncertainty. Until Wall Street can be sure that the consumer will hold on (or not), conviction is easily shaken. And when conviction is easily shaken, there is a heightened risk of stampedes. It takes a lot of data points to get to clarity, and the process of sifting through them to see the new shape of the market is in its early innings. Not all companies will come out on top in this new environment. Corporations were able to jack up prices over the past three years to pad record profits, but consumers are getting choosier about what they spend their money on, sometimes shifting to cheaper products. This is causing trouble for some brands that pushed their prices too far. Starbucks, which raised prices over the pandemic, missed earnings in the second quarter. McDonald's, which has raised prices by a whopping 40% since 2019, also whiffed. Meanwhile, Shake Shack, which raised prices by only about 8% through the pandemic, beat earnings estimates over the same period. This dispersion in winners and losers means that (gasp!) investors will need to be choosier about the stocks they pick, Kevin Gordon, a director and senior investment strategist at Charles Schwab, told me. Riding an index is not going to cut it anymore. "The ones that are doing well on pricing power are doing well. The ones who are not are getting crushed for missing estimates," he told me. "Companies that benefited from the inflation wave are no longer benefiting." Over the past few years, some of Wall Street's most prominent investors have complained that the art of fundamental financial analysis has been lost. Digging for cheap stocks, reading balance sheets, listening to investor calls — some of that has been replaced with quant trading and index hugging. Perhaps it will find its place in the market to come, or maybe it's just a stop on the way to the next trend. Part of the chaos of this moment is that no one knows. Known knowns and unknown knowns Investors have spent most of the past four years trying to get their heads around one unknown after another. Since 2020 they've gone from pandemic-driven emergency interest-rate cuts to historically fast, inflation-fighting interest-rate hikes. The economy was essentially put into sleep mode, scarcity pushed prices up, and corporations laid off workers only to bring them back. If this felt like a wild ride, that's because it was. After all that weirdness and uncertainty, returning to a normal state of affairs can feel like its own kind of shock. If all goes to plan, that is the kind of market we'll be entering: normality. A "normal" economy with inflation near 2%, steady job gains dispersed across industries, and a Fed that can maybe fade into the background for a while. Be boring. The Fed is likely to cut rates in September, but if the economy's deterioration accelerates, the probability of a recession increases, and those cuts may not be enough to stop it. A recession is a "normal" event, too, just not a particularly fun one. After years of weird times and outsize gains, Wall Street is dancing on a knife's edge. Trades that worked in our strange post-pandemic market will not work under a more standard economic regime of low inflation and lower interest rates. As we saw with the carry-trade blowup, changing those positions generally means violence. What happened on Monday was a sudden realization that the new structure may assert itself before Wall Street imagined it would. Expect more mayhem as the market parses every new piece of information, grasping for something solid, moving with whatever data eases or engenders recession fears. This is the tune the market is dancing to now. It's a kind of chaos, but consider it positive chaos. Linette Lopez is a senior correspondent at Business Insider. Read the original article on Business Insider
This "Magnificent Seven" Stock Looks Like a Steal Amid the Sell-Off 2024-08-12 01:00:00+00:00 - This week's stock market movement features a lot of fear. Tech stocks sold off heavily, while safe-haven stocks like utilities and pharmaceuticals saw increased interest. The Nasdaq entered correction territory, falling more than 10% off its recent highs. A relatively weak jobs report (114,000 created vs. 185,000 estimates) has some thinking about a recession again and selling stocks. Many investors get understandably jittery during these events. However, market pullbacks are entirely normal. I look forward to these opportunities. Finally, investors can purchase stocks at reasonable prices rather than at all-time highs. Even the "Magnificent Seven" stocks are not immune to a correction. Amazon (NASDAQ: AMZN) is trading 20% below its recent high, as shown below. AMZN Chart The downturn looks like an excellent opportunity for investors to pick up shares at a great price. Here's why. Were Amazon's earnings actually "bad"? The market wasn't pleased with Amazon's second-quarter earnings, but I think some are having trouble seeing the forest for the trees. Net sales increased 10% to $148 billion in Q2, a slowdown from the 13% growth in Q1. This should not be a surprise, given the economy-wide slowing of consumer spending. Amazon's operating income jumped 91%, from $7.7 billion in Q2 last year to $14.7 billion this year. While this looks terrific compared to 2023, it is 4% less sequentially. The slight slowdown in growth from Q1 to Q2 and new recession fears are worrying Wall Street. But Amazon's results were stellar where it matters most: AWS. AWS is Amazon's cash cow. The cloud segment accounted for $66 billion in operating profits for 2021-2023 combined, a whopping 89% of the company's total operating profit. This is despite a rough 2023 when companies cut data budgets in anticipation of a recession that never came. But artificial intelligence (AI) is now a massive tailwind for cloud service providers. Generative AI programs require incredible data and processing power, and AWS will be a major beneficiary. As shown below, AWS revenue growth accelerated in each of the last three quarters. Data source: Amazon. This trend is encouraging and bodes well for Amazon's results and stock over the long haul. Is Amazon stock a buy now? When valuing Amazon, I like to look at its price-to-sales (P/S) ratio and its price-to-cash from operations (CFO). Cash from operations, often called operating cash flow, is important because it tells us how much money a company's primary business generates. As depicted below, Amazon is undervalued by 13% based on sales and 75% based on cash flow compared to its 10-year averages. Story continues AMZN Price to CFO Per Share (TTM) Chart This is the lowest it has traded based on cash flow in over 10 years. Valuing Amazon requires looking past a simple price-to-earnings (P/E) ratio, but the current P/E ratio of 38 is also the lowest in more than 10 years. Amazon's overall sales growth could continue hovering near 10%. Management guided for 8% to 11% growth next quarter. However, AWS is the profit center; it has AI tailwinds and accelerating growth. At times like these, I like to remember two things that Warren Buffett says: "Be greedy when others are fearful" and "the stock market is a device for transferring money from the impatient to the patient." This advice could work well for Amazon investors. Should you invest $1,000 in Amazon right now? Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $641,864!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. See the 10 stocks » *Stock Advisor returns as of August 6, 2024 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Bradley Guichard has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy. This "Magnificent Seven" Stock Looks Like a Steal Amid the Sell-Off was originally published by The Motley Fool
Down Between 12% and 24% From Their 52-Week Highs, 3 Magnificent Dow Dividend Stocks to Buy Now 2024-08-12 00:07:00+00:00 - The Dow Jones Industrial Average is known for containing 30 industry-leading components from a variety of stock market sectors. But even Dow stocks can endure steep sell-offs. Dow components Salesforce (NYSE: CRM), Chevron (NYSE: CVX), and Home Depot (NYSE: HD) are down between 12% and 24% from their 52-week highs and are all down year-to-date despite gains in the broader indexes like the Dow, S&P 500, and Nasdaq Composite. Here's why all three dividend stocks stand out as solid buys for patient investors. Image source: Getty Images. Salesforce is a balanced buy It may have surprised investors when Salesforce -- a growth stock -- was added to Dow in August 2020. At the time, Salesforce was inconsistently profitable and didn't pay a dividend. But Salesforce has matured a lot as a company in recent years. Today, it is no longer focused purely on revenue and reinvesting everything back into the business. The company is highly profitable, announced its first-ever quarterly dividend earlier this year, and is buying back a ton of its stock. Companies like Salesforce reward employees with stock-based compensation, which can dilute existing shareholders. Over the last decade, Salesforce's outstanding share count has increased by 54%. However, it has bought back stock in recent years to help offset stock-based compensation and has reduced its share count by 1% over the last three years. Salesforce has taken a page from Microsoft's playbook. Microsoft paid a record $10.7 billion in stock-based compensation over the last 12 months -- up 123% in five years, but has managed to reduce its outstanding share count by 2.6% over that time thanks to buybacks. It takes a highly profitable business to execute this kind of strategy. But if done right, it can help companies recruit and retain top talent without diluting shareholders. Salesforce stands out as one of the most balanced tech stocks out there. The dividend yield is just 0.7% -- but again the company just began paying dividends. The forward price-to-earnings (P/E) ratio is just 24.5 -- suggesting Salesforce is fairly inexpensive compared to its historical valuation. The biggest red flag with Salesforce is that growth has slowed, and the company hasn't done a great job monetizing artificial intelligence. However, it would be a mistake to overlook Salesforce's industry-leading position and runway for long-term growth in enterprise software. There are plenty of other tech stocks that are in favor -- but many of them command expensive price tags. Salesforce stands out as a good buy if you are looking for a more reasonable valuation and a company that isn't going full throttle on growth, but rather is focused more on profitably and returning capital to shareholders through buybacks and dividends. Story continues Chevron is still a top pick in the oil patch Despite strong results, Chevron is hovering around a 52-week low. Oil prices are partially to blame. West Texas Intermediate (WTI) crude oil prices -- the U.S. benchmark -- have spent most of the year above $75 per barrel. However, oil prices have been falling recently, and WTI prices are now under that mark. WTI Crude Oil Spot Price Chart Chevron's closest peer -- ExxonMobil -- is up nicely on the year and is within just 5% or so from an all-time high. Although they are similar businesses, ExxonMobil and Chevron do have some distinct differences, especially regarding their merger and acquisition activity. While Exxon completed its acquisition of Pioneer Natural Resources in May, Chevron has yet to make progress on its acquisition of Hess. It's been 10 months since Chevron first made the announcement to buy the exploration and production company for $53 billion, but a variety of roadblocks stand in its way. Although Chevron isn't as spotless as Exxon right now, it stands out as a particularly compelling buy. Consistent dividend raises paired with a sell-off in the stock have pushed Chevron's yield up to 4.6%. Over the last two years, Chevron returned $50 billion to shareholders through dividends and buybacks -- illustrating the extent of its outsize earnings. Chevron can fund its operations and dividend even when oil is $50 per barrel, giving it a nice margin of error relative to current oil prices. Add it all up, and Chevron is a quality dividend stock to buy now. Home Depot can emerge from an industrywide slowdown even stronger Home Depot is roughly flat on the year for a variety of arguably valid reasons. For starters, Home Depot's growth has ground to a halt. The company is sensitive to ebbs and flows in the broader economy. So far this earnings season, a variety of companies have indicated that consumers remain selective on spending, especially on discretionary goods. Home Depot benefits from a strong economy and a hot housing market. Lower interest rates are excellent news for Home Depot because they mean cheaper borrowing costs, lower mortgage rates, and less expensive financing on home improvement projects. Unfortunately, that is not the environment we are in today. However, there are degrees to cyclical companies. For example, some companies are truly boom or bust based on economic factors or commodity prices. But Home Depot is more so boom or stagnate. Over the last decade, Home Depot's sales have nearly doubled, and diluted earnings per share have more than tripled. But over the last couple of years, you can see that Home Depot's earnings and sales are slightly down. HD Revenue (TTM) Chart While Home Depot's performance could continue to disappoint in the near term, there's no reason to believe anything has changed about the underlying investment thesis. Earlier this year, Home Depot made a massive $18 billion acquisition because it had the dry powder needed to invest no matter the market cycle. It's also worth understanding that Home Depot's dividend is affordable, seeing as the company's payout ratio is a healthy 57%. With a P/E ratio of 23.2 and a yield of 2.5%, Home Depot is a balanced, industry-leading business worth buying now. Zoom out and think long-term Salesforce, Chevron, and Home Depot may operate in entirely different industries. But all three companies are similar in that they are undergoing slower growth or even negative growth (in the case of Home Depot). Short-term-minded investors may quickly pass on all three companies, but long-term investors focus on where a company will be several years from now rather than where it is today. Salesforce, Chevron, and Home Depot show no signs of losing their industry-leading positions -- making all three stocks worth considering now. Should you invest $1,000 in Salesforce right now? Before you buy stock in Salesforce, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Salesforce wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $641,864!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. See the 10 stocks » *Stock Advisor returns as of August 6, 2024 Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron, Home Depot, Microsoft, and Salesforce. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Down Between 12% and 24% From Their 52-Week Highs, 3 Magnificent Dow Dividend Stocks to Buy Now was originally published by The Motley Fool
Inflation data, retail sales, Walmart earnings await a jumpy stock market: What to know this week 2024-08-12 00:02:00+00:00 - A volatile week of trading action on Wall Street saw the stock market finish the week just about where it left off last Friday. Panic hit financial markets on Monday as the unwinding of the yen carry trade spiked volatility after investors rapidly moved to price in higher odds of a recession and further easing from the Federal Reserve following last week's July jobs report. In the latter part of the week, markets course-corrected as new data on weekly unemployment benefits cooled fears that the US economy was rapidly spiraling toward a downturn. The whipsaw action left stocks nearly flat on the week despite opening Monday sharply in the red. For the week, the S&P 500 (^GSPC) was almost exactly unchanged, while the Nasdaq Composite (^IXIC) fell less than 0.2%. The Dow Jones Industrial Average (^DJI) fell about 0.6%. On Monday alone, both the S&P 500 and Nasdaq fell more than 3%. The week ahead will give investors fresh fodder in the debate over how quickly and deeply the Federal Reserve should cut interest rates, with the July Consumer Price Index (CPI) and retail sales reports highlighting the economic calendar. Updates on consumer sentiment, weekly unemployment claims, and manufacturing production will also be in focus. On the corporate side, earnings season continues to wind down, though the focus will remain on the consumer, with reports from Home Depot (HD), Walmart (WMT), and Alibaba (BABA) headlining an otherwise quiet week for quarterly results. Fed bets run wild After the July jobs report heightened fears the Fed may have held rates too high for too long, the hot debate on Wall Street shifted from when the Fed should start cutting to how much the central bank should slash interest rates. From the discussion of an emergency inter-meeting cut to the market nearly fully pricing in a 100% chance of a 50 basis point cut in September, markets have been on a wild ride trying to assess what the next likely move will be from the central bank. Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards As of Friday afternoon, markets were pricing in a roughly 50% chance the Federal Reserve cuts interest rates by 50 basis points by the end of its September meeting, down from 75% a week prior, according to the CME's FedWatch Tool. Still, some economists have been arguing that pricing is too aggressive. "The combination of higher unemployment and lower inflation has further strengthened what was already a solid case for Fed easing, and we expect cumulative cuts of 200 [basis points] over the next 1-2 years," Goldman Sachs chief economist Jan Hatzius wrote in a note to clients on Aug. 7. Story continues "However, we think market pricing is too aggressive in the near term, especially with respect to the probability of a 50bp cut at the September 17-18 FOMC meeting." Inflation back in focus The next test for the Fed debate will come on Wednesday, with the release of the July Consumer Price Index (CPI) offering investors the latest look at inflation. Wall Street expects headline consumer prices, including the price of food and energy, to post an annual gain of 3%, unchanged from June's reading. Inflation is set to rise 0.2% on a month-over-month basis after declining 0.1% in June. On a "core" basis, which strips out the food and energy prices, inflation is expected to have risen 3.2% year over year, a slowdown from the 3.3% increase seen in June. Monthly core price increases are expected to log a 0.2% increase compared to 0.1% in June. "The July CPI report is likely to further the case that inflation is quieting down even if it has not yet returned all the way back to the Fed's target," Wells Fargo senior economist Sarah House wrote in a note to clients. A reading on retail A fresh reading on retail sales will also be closely tracked on Thursday as investors search for clues on whether the US economy — and importantly, the US consumer — is slowing. Economists expect that retail sales rose 0.3% in July from the prior month. Excluding gas and autos, expectations are for a 0.2% increase, which would mark a deceleration from the 0.8% sales growth seen in June. Bank of America's head of economics, Michael Gapen, highlighted in a note to clients last week that a soft retail sales print "may not excite markets, who remain conscious of downside risk." But given the large increase for retail sales in June, a weaker print still "leaves spending on track for a reasonably strong quarter." "Overall, should the data [retail sales and inflation] come in as we expect, we look for the market to price in fewer cuts this year and reduce the likelihood of a large cut in September," Gapen wrote. Stocks will want 'good' economic news The latest data from FactSet senior earnings analyst John Butters shows S&P 500 companies are pacing for 10.8% year-over-year earnings growth, the highest annual growth rate since the fourth quarter of 2021. Though, as Citi US equity strategist Scott Chronert wrote in a note to clients this week, "earnings have taken a bit of a backseat to the macro-driven price action in the last two weeks." This was exemplified by stocks mounting their best one-day rally since 2022 last week, rising 2.3% as a typically benign weekly unemployment benefit data release helped ease concerns about the economy. DataTrek co-founder Nicholas Colas wrote in a note Friday morning that a rally of this magnitude following a report like initial jobless claims said "more about the stock market's fragile state and nervousness about economic data than anything else." This puts the upcoming week's data onslaught in particular focus. And if markets move to price in fewer Fed cuts and bond yields rise following next week's data, that could be a positive catalyst for stocks given the market's shift to an environment where bad news is bad news and good news is good news. "Not only is good news going to be good, I think good news is actually going to be very good, and bad news is going to be very bad," Piper Sandler chief investment strategist Michael Kantrowitz said in a video to clients on Friday. "We're going to see a lot of good days, a lot of bad days, and a lot more market volatility than we've seen most of this year." Weekly calendar Monday Economic data: New York Fed one-year inflation expectations, July (3.02% previously) Earnings: Rumble (RUM) Tuesday Economic data: NFIB Small Business Optimism, July (91.7 expected, 91.5 previously); Producer Price Index, month over month, July (+0.2% expected, +0.2% previously); PPI, year over year, July (+2.3% expected, 2.6% previously) Earnings: Home Depot (HD), On Holdings (ONON) Wednesday Economic data: Consumer Price Index, month-over-month, July (+0.2% expected, -0.1% previously); Core CPI, month over month, July (+0.2% expected, +0.1% previously); CPI, year over year, July (+3% expected, +3% previously); Core CPI, year over year, July (+3.2% expected, +3.3% previously); Real average hourly earnings, year over year, July (+0.8% previously); MBA Mortgage Applications, week ending Aug. 9 (+6.9%) Earnings: Brinker International (EAT), Canoo (GOEV), Cisco (CSCO), Dole (DOLE), UBS (UBS) Thursday Economic data: Initial jobless claims, week ending Aug. 10 (236,000 expected, 233,000 previously); Retail sales, month over month, July (+0.3% expected, +0% previously); Retail sales ex-auto and gas, July (+0.2% expected, +0.8% previously); Import prices, month over month, July (-0.1% expected, +0.0% previously); Export prices, month over month, July (+0.7% previously); Industrial production, month over month, July (-0.2% expected, +0.6% previously); NAHB housing market index, August (42 prior); Empire Manufacturing, August (-6 expected, -6.6 prior); Earnings: Applied Materials (AMAT), Alibaba (BABA), JD.Com (JD), Deere & Company (DE), H&R Block (HRB) Friday Economic data: University of Michigan consumer sentiment, August preliminary (66.1. expected, 66.4 previously); Building permits month over month, July (-0.9% expected, +3.4% previously); Housing starts month over month, July (-0.2% expected, +3% previously) Earnings: No notable earnings. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Click here for in-depth analysis of the latest stock market news and events moving stock prices Read the latest financial and business news from Yahoo Finance
Arm Holdings Plummets 40% Amid the Sell-Off, Is It a Strong Buy Now? 2024-08-11 22:40:00+00:00 - Semiconductors are among the most essential technologies on the planet. They enable everything from thermostats to smartphones to autonomous vehicles. Now, artificial intelligence (AI) demands even higher performance. These high-performance products are so important that there is geopolitical tension between the U.S. and China related to import and export bans and Taiwan, where most of the world's semiconductors are manufactured. Because of the high demand and healthy tailwinds, many industry stocks, including Arm Holdings (NASDAQ: ARM), took off in 2024. The enthusiasm pushed Arm's valuation to nosebleed levels, but the recent market sell-off has pulled Arm down nearly 40% from its recent highs, as shown below. ARM Chart Arm is a different kind of semiconductor company, and this is a big advantage. Let's examine what it does and whether the downturn is a golden opportunity. Why is Arm's business model so desirable? Arm Holdings is a semiconductor company that doesn't actually produce semiconductors. Instead, Arm designs the "infrastructure" for central processing unit (CPU) chips that its customers, like Apple, Samsung, Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing (NYSE: TSM), use as a blueprint for building. Arm then receives payments for licensing and royalties based on the number of products sold. The cumulative number of Arm-enabled chips is 287 billion, and they capture 99% of the global smartphone market. Because Arm is not a manufacturer, its financial results resemble those of a software company because of three traits: Impressive free cash flow High gross margin Recurring revenue Arm doesn't need to invest a lot of capital in factories and equipment (known as capital expenditures) like other semiconductor companies do. Arm spends less than 5% of its revenue on capex, while Taiwan Semiconductor, for example, routinely spends more than 30%. Because of the tiny spend on capex, Arm translated 20% of revenue, or $709 million, into free cash flow over the past 12 months. On the gross margin front, Arm compares favorably to software companies like Palantir Technologies (NYSE: PLTR) and is well ahead of other semiconductor stocks, as depicted below. ARM Gross Profit Margin Chart A high gross margin generally means a company can convert more incremental sales growth into net profits. Finally, Arm's revenue isn't just recurring; it also takes advantage of legacy products. When Arm creates a new product for a new use case, its older designs still sell. As shown below, this allows the company to "stack" new sales on top of old. Story continues Image source: Arm Holdings. Royalties from older products are outstanding for the bottom line since the research and development costs were paid for years ago. This business model is terrific for profitability. Is Arm Holdings stock a buy now? With its desirable business model and brisk tailwinds, it's no wonder investors bid the stock up from its September 2023 IPO price of $51 to over $180 per share. However, valuation is still important. At its peak, Arm stock traded for more than 50 times sales. The recent sell-off reduced this to 34 and the share price to under $115; however, this is still pricy. Many investors and analysts consider Palantir richly valued. As shown below, Arm's price-to-sales (P/S) ratio is still 25% higher than Palantir's after the recent correction. ARM PS Ratio Chart Arm is a terrific company that will probably make investors hefty profits over the long haul, but shares could continue to fall in the short term due to the valuation. There are tools investors can use to manage short-term risk, like dollar-cost averaging, buying on dips, or simply waiting patiently for the valuation to fall. When it does, I'll be ready to pounce. Should you invest $1,000 in Arm Holdings right now? Before you buy stock in Arm Holdings, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Arm Holdings wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $641,864!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. See the 10 stocks » *Stock Advisor returns as of August 6, 2024 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Bradley Guichard has positions in Alphabet, Arm Holdings, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Nvidia, Palantir Technologies, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy. Arm Holdings Plummets 40% Amid the Sell-Off, Is It a Strong Buy Now? was originally published by The Motley Fool
Disney World is entering its villain era 2024-08-11 21:19:26+00:00 - By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time by visiting our Preferences page or by clicking "unsubscribe" at the bottom of the email. Access your favorite topics in a personalized feed while you're on the go. download the app Thanks for signing up! Go to newsletter preferences Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Disney Experiences Chairman Josh D'Amaro unveiled ambitious plans for Walt Disney World, including new attractions and in-park destinations. D'Amaro presented the plans to the company's most ardent supporters on Saturday at D23: The Ultimate Disney Fan Event in Anaheim, California. The expo, which comes every two years, is a coveted event for Disney enthusiasts, including cross-fandom franchises like "Star Wars" from Lucasfilm and "The Avengers" from Marvel Studios. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. A-list celebrities often take the stage to promote upcoming projects, and Disney executives typically use the platform to unveil major announcements to delighted fans. Disney fans attended D23 on Saturday. Araya Doheny/Getty Images This weekend was no different. Advertisement "Disney Experiences is embarking on an accelerated path of ambitious growth and innovation," he said in a press release. "With so many great Disney stories to tell, we're excited to bring an unprecedented number of new projects to life in the near future." D'Amaro discussed a wide-scale expansion at Walt Disney World in Central Florida. Magic Kingdom will become home to Villains Land, where guests will spend time with Disney's most notorious baddies. The villain-centric land is a victory for Disney fans who've rallied behind the idea on Reddit and other forums for years. Two attractions based on the "Cars" franchise will also arrive at Magic Kingdom: an off-road rally race and a family-friendly ride. Advertisement "As we develop the next generation of Disney Experiences, we're always looking for new ways to tell the stories people love," D'Amaro said. "We're thrilling Cars fans by building on this incredibly successful franchise and creating the next chapter in this story." Magic Kingdom is getting new attractions, including two based on the movie "Cars." Joe Burbank/Orlando Sentinel/Tribune News Service via Getty Images Magic Kingdom isn't the only Florida-based park undergoing renovations. Related stories The company is building a new land in Animal Kingdom called Tropical Americas, which includes a village in a rainforest called Pueblo Esperanza. Guests will be able to adventure with Indiana Jones in a Mayan temple. A new "Encanto" attraction is joining the roster, too. It will be the first ride-through attraction for "Encanto" and will take place inside Casita. Advertisement Tropical Americas opens in 2027. At Hollywood Studios, Pixar fans can explore a new land based on Monsters, Inc. Guests can tour the Laugh Factory in addition to an undisclosed attraction that will become the first suspended coaster at a Disney park. Disney's moneymaker Disney's theme parks are a big money-maker. But the company's announcement of its expansions came four days after executives acknowledged that the theme parks stumbled in the third quarter. The Experiences division's revenue grew 2% year over year, but operating income declined by 3%. Disney's most recent earnings report blamed inflation, among other factors. Advertisement "We talked about the fact that the lower-income consumer is feeling a little bit of stress. The high-income consumer is traveling internationally a bit more," Disney CFO Hugh Johnston said during a Q&A webcast this month. "I think you're just going to see more of a continuation of those trends in terms of the top line." Disney's earnings report said income for its Experiences division was down in quarter three. Walt Disney World Disney's expansion It also comes after The Central Florida Tourism Oversight District approved a $17 billion development deal for Disney that could transform its Central Florida properties. The development deal is the product of a contentious legal battle between Disney and Florida Gov. Ron DeSantis, whose administration took control of the local tourism district from Disney last February. Disney had previously self-managed any development in the area with little government oversight through its own board. The legal battle began in 2022 and ended this March when both parties agreed to a settlement. Advertisement When the development deal was approved, Disney hadn't disclosed how it would use the billions of dollars, but the new D23 announcements could be a sign of things to come. Representatives for Walt Disney World did not immediately respond to a request for comment from Business Insider. Disney beyond Florida D'Amaro also shared details about how other Disney theme parks would expand. At Disneyland in California, Marvel will get noticeably bigger. The Avengers Campus will double its current size to hold new attractions. And following the success of James Cameron's "Avatar: The Way of Water," D'Amaro said an attraction inspired by the franchise is coming to Disney California Adventure. Advertisement Although Disney is investing heavily in its domestic theme parks, it also plans to expand Disneyland Paris and Shanghai Disneyland. The company will also bolster its cruise operations by adding four new ships to its fleet from 2027 to 2031.
JD Vance tries out a $5,000 expanded child tax credit proposal to secure support from the pro-family crowd 2024-08-11 21:10:10+00:00 - By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time by visiting our Preferences page or by clicking "unsubscribe" at the bottom of the email. Access your favorite topics in a personalized feed while you're on the go. download the app Thanks for signing up! Go to newsletter preferences Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Sen. JD Vance could use an image boost. Since becoming former President Donald Trump's pick for vice president, the Ohio Republican has been hounded by some controversial past comments. From previously calling himself a "never Trump guy" to disparaging several top Democratic Party leaders as "childless cat ladies," he's repeatedly had to address remarks that have raised eyebrows. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Amid his ongoing effort to solidify his image as pro-family (but not in a "weird" way), Vance on Sunday floated a generous $5,000 child tax credit during an interview on CBS' "Face the Nation." Advertisement "I'd love to see a child tax credit that's $5,000 per child. But you, of course, have to work with Congress to see how possible and viable that is," Vance told host Margaret Brennan. Vance is working to position the GOP as the party that would do more to help families. And with most voters continuing to rate the economy as their top issue heading into the general election, the child tax credit remains a top issue for many lawmakers in Washington. Related stories The current child tax credit allows up to $2,000 per child. During the coronavirus pandemic, Congress expanded that amount to an annual credit of $3,000 to $3,600, depending on the age of the child, but Republicans let that provision expire at the end of 2021. Advertisement There's bipartisan support for an expanded credit in the House. But the Senate — with its slim 51-seat Democratic majority and the need for 60 votes to break a filibuster — has held up any meaningful progress on the issue. In early August, the Senate voted 48-44 on the expanded child tax measure, meaning it did not advance. Vance missed that vote. While on CBS, the Ohioan referred to Senate Majority Leader Chuck Schumer's legislative move as a "show vote," saying it simply didn't have enough support to pass regardless of his presence. The absence will likely contribute to Democratic efforts to play up the issue ahead of the election as the party looks to hold the White House, keep the Senate, and flip the House.
Trump promotes false Harris AI crowd size conspiracy 2024-08-11 20:49:00+00:00 - U.S. Vice President and Democratic Presidential candidate Kamala Harris speaks to supporters during a campaign rally in Romulus, Michigan, U.S., August 7, 2024. The Harris campaign replied that it is "an actual photo of a 15,000-person crowd for Harris-Walz in Michigan." CNBC also licensed a Getty Images photo for the story that matches the photos being circulated. Trump was referring to an image of a large crowd gathered on the tarmac in Michigan on Aug. 7, cheering for Harris as she stepped out of Air Force Two. His comments parroted a false conspiracy that is being spread online by MAGA Republican commentators, some of whom have previously been caught promoting misinformation . "Has anyone noticed that Kamala CHEATED at the airport? There was nobody at the plane, and she 'A.I.'d' it, and showed a massive 'crowd' of so-called followers, BUT THEY DIDN'T EXIST!" the Republican presidential nominee wrote on Truth Social . Former President Donald Trump on Sunday falsely accused his November election opponent, Vice President Kamala Harris , of using AI technology to fabricate images of the crowd sizes at her rallies, amplifying an unfounded conspiracy to explain the strong enthusiasm for the new Democratic ticket. People cheer and hold signs at a campaign rally for Vice President Kamala Harris and her running mate, Tim Walz, in Romulus, MI, on August 7, 2024. The Harris campaign also used the opportunity to point out the contrast between Harris' campaign schedule over the past week and Trump's: "Trump has still not campaigned in a swing state in over a week... Low energy?" The false allegation from Trump lands in the middle of an election where huge advances in AI tools have eased the process of spreading misinformation. This makes it more difficult than ever for voters to discern reality from internet conspiracy. Trump's peddling of the false conspiracy was only one of several social media tirades he launched against Harris over this weekend. On Saturday, he accused Harris for copying his proposal to eliminate taxes on tips, which she announced at her Las Vegas rally Saturday. Trump made the same promise at his own Las Vegas rally in June. ″[Harris] has no imagination, whatsoever, as shown by the fact that she played 'COPYCAT' with, NO TAXES ON TIPS!" Trump wrote in a Truth Social post on Saturday evening. Trump's outrage on social media reflects a Republican presidential campaign that is struggling to find its footing after Harris' entry upended the race. In the three weeks since President Joe Biden dropped out of the race and endorsed Harris, donations to Democrats have poured in at record levels. Harris' rallies have also regularly drawn thousands of attendees. Last week, the Harris campaign launched a tour of seven battleground states across the country, part of the coordinated rollout of Harris' vice presidential running mate, Minnesota Gov. Tim Walz. This campaigning pace is considerably faster than what voters saw when Biden helmed the ticket. It also draws a stark contrast between Harris' back-to-back-to-back rallies and Trump's lighter schedule this month. Trump has held two rallies so far in August as well as several fundraisers. He recently said he does not plan to ramp up his campaign travel until after the Democratic National Convention, which runs from Aug. 19 to Aug. 22.
Warren Buffett Declares Shift: Selling Apple Stock To Invest In This 'Magnificent' Megacap – Here's Why 2024-08-11 20:45:00+00:00 - Warren Buffett, arguably America’s most successful investor, is at it again. His latest moves in the stock market have captured the attention of investors. Under his control since 1965, he has led Berkshire Hathaway (BRK. A, BRK. B) to nearly double the performance of the S&P 500 with his calculated decisions. Don't Miss: Buffett’s large stake in Apple (AAPL) has been a source of intrigue for years. Berkshire Hathaway began buying AAPL shares in 2016, and the technology giant became one of its largest holdings. Buffett previously had nice things to say about the technology giant, referring to it as a “better business” than other companies in Berkshire’s portfolio. Despite those positive comments, recent moves suggest Buffett is changing his strategy with Apple. See Also: Amid the ongoing EV revolution, previously overlooked low-income communities now harbor a huge investment opportunity at just $500. According to a report by CNBC, Berkshire Hathaway drastically reduced its stake from 905 million in Apple as of December 2023 to 400 million by June 2024, a 55% decline. Nobody might have expected this since Buffett has been a big admirer of the tech giant. Perhaps this carries the sell-off reasoning toward Apple’s recent performance. The company still posted revenues of $85.8 billion in the June quarter – 4.8% above the same period last year – but the future outlook was grim. See Also: Don’t miss out on the next Nvidia – you can invest in the future of AI for only $10. Sales on the Chinese market, a key market for Apple, plummeted by 6%, and the company’s operating income fared even worse with a 10% decrease. It lost its previous position in the top five smartphone companies within China, while competitive brands such as Huawei and Xiaomi fared very well. These problems and a valuation that some analysts believe appears stretched may have prompted Buffett to reassess his stance. Despite trimming Berkshire's stake in Apple, Buffett remains bullish on another investment: Berkshire Hathaway. He has repurchased $5 billion of Berkshire shares in the last three quarters, indicating a bright outlook. “With our present mix of businesses, Berkshire should do a bit better than the average American corporation,” he wrote in a recent shareholder letter. Story continues Trending: Don’t miss the real AI boom – here’s how to use just $10 to invest in high growth private tech companies. Berkshire Hathaway’s financial results have been outstanding despite its ups and downs. In June, the company reported a 1.2% revenue gain to $93.7 billion and a 16% rise in operating earnings to $11.6 billion. The insurance group did particularly well, with earnings from underwriting and fixed-income investment up 56%. However, Berkshire’s GAAP net income dropped by 16%, to $30.3 billion, a number Buffett has called one that investors should pay very little attention to because of the volatility of unrealized gains and losses on stock investments. Trending: Commercial real estate has historically outperformed the stock market, and this platform allows individuals to invest in commercial real estate with as little as $5,000 offering a 12% target yield with a bonus 1% return boost today! Analysts have long forecast Berkshire’s operating earnings to increase 10% in 2024 and then reduce by 3% growth in 2025. With Buffett’s ongoing buyback program, this would have given the appearance that he is getting extreme value for Berkshire Hathaway, even as he reduces his exposure to other assets, such as Apple. Berkshire Hathaway could very well be a godsend for investors seeking a safe and stable long-term investment. If Warren Buffett continues to express so much faith in his own company, this might well be a green light for others to do the same. Read Next: "ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now! Get the latest stock analysis from Benzinga? This article Warren Buffett Declares Shift: Selling Apple Stock To Invest In This 'Magnificent' Megacap – Here's Why originally appeared on Benzinga.com © 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Nvidia wants to help California train its residents on advanced AI 2024-08-11 20:25:54+00:00 - Nvidia is partnering with California to train residents on AI technology. The initiative, backed by Gov. Gavin Newsom, aims to support job creation and innovation. The effort includes a state worker training program. Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Thanks for signing up! Go to newsletter preferences Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time by visiting our Preferences page or by clicking "unsubscribe" at the bottom of the email. Advertisement Chipmaker Nvidia is teaming up with the State of California to help educate students and educators on AI. The partnership — cosigned by California Gov. Gavin Newsom and Nvidia CEO Jensen Huang — will train residents on how to use the technology to support job creation, promote innovation, and leverage AI to solve everyday problems, according to a press release from California Gov. Gavin Newsom. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in .
'Heavy lifter' drones could soon solve Mount Everest's trash problem 2024-08-11 20:14:56+00:00 - Sherpas will soon use drones to remove trash from Mount Everest's slopes. Everest's peak has become a massive garbage dump with 50 metric tons of waste annually. Chinese drone manufacturer DJI developed the "heavy lifter" high-altitude drones. Sign up for our newsletter to get the latest on the culture & business of sustainability — delivered weekly to your inbox. Thanks for signing up! Go to newsletter preferences Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy Advertisement Mount Everest looks more like a landfill every year as crowds of adventurous climbers flock to its slopes. Visitors have left an estimated 50 metric tons of waste on Everest. The mountain is so full of garbage that people have called it "the world's highest garbage dump." Nepal has tried all kinds of solutions, including a mandate that climbers collect and carry out 18 pounds of garbage every time they visit or pay a fee of thousands of dollars. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in .
World beaters: Women athletes ruled the Olympics 2024-08-11 19:55:00+00:00 - The 2024 Paris Olympics belonged to women. These were the first Games in history to achieve gender parity in terms of having an equal number of women and men compete. Women shone on the world stage, beating many records along the way. Katie Ledecky of the U.S. celebrates after winning gold in the women’s 1,500-meter freestyle on July 31. Sarah Stier / Getty Images file Perhaps most impressive is the sheer number of medals won by U.S. women. They took 67 out of Team USA’s 126 total — outdoing the men by seven medals (though one of those medals, Jordan Chiles’ bronze, has been called into question after the IOC asked her to cede it to Romania). Gold medalist Simone Biles of the U.S. and bronze medalist Suni Lee of the U.S. celebrate on the podium for the women's all-around on Aug. 1. Jamie Squire / Getty Images If American women were their own nation, they would have won the third-most medals, only behind the U.S. and China — and that would be true even without Chiles’ bronze. The country in fourth place, with the closest number of medals to the American women, is Great Britain, with 65 medals. Sixty-seven medals is a record for U.S. women and a record for any country’s women in general, beating the U.S. total of 66 in Tokyo. The American men did well for themselves too — their 60 medals would be the fifth most if they were a country. Lauren Scruggs of the U.S. celebrates winning against Amita Berthier of Singapore in the women's foil individual table of 32 on July 28. Al Bello / Getty Images file Katie Ledecky won her ninth gold medal and 14th overall these Games, becoming the most decorated female Olympic swimmer of all time. Simone Biles and the women’s gymnastics team — the so-called “Golden Girls” — had a successful redemption tour, bringing home gold in the team competition. Biles and Suni Lee went 1-2 on the all-around and became the first two all-around women gold medalists to go head-to-head in an all-around final. Meanwhile, Chiles and Biles bowed down to Brazil’s floor gold medalist Rebeca Andrade in a heartwarming moment on the podium. Amit Elor became the United States’ youngest wrestler to compete and win a gold medal, and Lauren Scruggs made history as the first openly out and Black woman to medal in fencing, bringing home an individual silver and a team gold. The women’s U.S. basketball team won its eighth Olympic gold in a row, earning a shoutout from former President Barack Obama on X. The star-studded women’s 4x400-meter relay team rushed to gold yesterday, closing the track and field events for the Games and beating all its competitors by almost four whole seconds. Imane Khelif of Algeria celebrates boxing gold at the Olympic Games on Friday. Ulrik Pedersen / DeFodi Images via Getty Images Although there were a lot of triumphs for women, there was also backlash against two athletes whose gender was wrongly called into question. Algerian boxer Imane Khelif, who won a gold medal in the women’s welterweight division, and featherweight Lin Yu-ting of Chinese Taipei have had a cloud cast over them after Khelif’s opening victory against Italian Angela Carini. Khelif defeated Carini in only 46 seconds. Carini refused to shake Khelif’s hand after the bout and fell to the floor crying. Her rapid defeat brought to light allegations from 2023 by the Russian-led International Boxing Association, which removed Khelif and Lin from a competition in New Delhi last year for failing to pass a “gender eligibility test.” False claims about Khelif's gender erupted online, triggering a storm of online harassment which is now the source of a legal battle. Khelif filed a legal complaint Sunday alleging she was the target of “aggravated cyber-harassment.” Her lawyer described it as a “misogynist, racist and sexist campaign” against the boxer. The International Olympic Committee defended her and denounced those peddling misinformation. Khelif said that the spread of misconceptions about her “harms human dignity.” Khelif’s home country rallied around her, defending her from the misconceptions about her gender and celebrating her as she boxed her way to a gold medal in a decisive win Tuesday. She was named Algeria’s flag bearer Sunday, and will be leading the delegation during the closing ceremony.
Transcript: Bank of America CEO Brian Moynihan on "Face the Nation with Margaret Brennan," Aug. 11, 2024 2024-08-11 19:53:00+00:00 - The following is a transcript of an interview with Bank of America CEO Brian Moynihan that aired on "Face the Nation with Margaret Brennan" on Aug. 11, 2024. MARGARET BRENNAN: We're joined now by the CEO of Bank of America, Brian Moynihan. Good to have you here. BRIAN MOYNIHAN, CEO OF BANK OF AMERICA: It's great to be here again. Margaret, good to see you. MARGARET BRENNAN: Good to see you. And this is a week where we had a lot of turbulence in the financial markets and some jitters here. We know that both presidential campaigns in the coming days will outline their vision for the economy. So I'm hoping you can kind of level set for us. What is the reality of what you are seeing with American consumers right now? BRIAN MOYNIHAN: Well, in our consumer base of 60 million customers spending every week, what you're seeing is they're spending at a rate of growth of this year over last year, for July and August so far, about 3%. That is half the rate it was last year at this time. And so the consumer has slowed down. They have money in their accounts, but they're depleting a little bit. They're employed, they're earning money, but if you look at- they've really slowed down. So the Fed is in a position they have to be careful that they don't slow down too much. Right now, where they are spending at is consistent where they spent in '17, '18,'19, a lower inflation, a more normal growth economy. MARGARET BRENNAN: I saw in one of your Bank of America reports that, and you just alluded to this more price sensitivity and that savings accounts are being diminished. That would suggest people really are not bringing in enough that they have to go into their- into their savings. Like, is this all just inflation that's pressuring? BRIAN MOYNIHAN: If you look across different segments of earnings power, those answers are somewhat different. But if you look at it overall, there's been a lot of money moved to instruments that pay higher interest rates out of the checking accounts. They cleaned up because it went from 0% interest to 5% interest. And so if you remove that, basically, the people who had an account with us in January 2020, before the pandemic, you look at them now, they're still sitting with much more, even inflation adjusted, much more, in their account. The problem is it started drifting down, which indicates that they're using that money now to maintain a lifestyle that's not that unusual in the summer months, frankly, because the travel, vacations and everything. And where the money is being spent by our consumers is on those types of experiences. But if you look within it, they're still going to restaurants and they're taking travel, but on the other hand, they're spending a little bit- They're going to the food store the same number of times it's spending a little bit less, which means they're basically finding bargains and things like that. And you're seeing corporations cut price to respond to that. And so it's the way the economy works and it's slowing down, and that's where we have to be careful, because we've won the war on inflation, it's come down. It's not where people want it yet, but we got to be careful that we don't try to get so perfect that we actually put us in recession. But our team is a great team at Bank of America Research does not have any recession predicted anymore. Last year, this time, it was a recession. This year we talked about now there's no recession. And basically they say we go to 2% growth, the one and a half percent growth over the next six quarters and kind of bump along at that growth rate plus or minus-- MARGARET BRENNAN: -- And they're betting that in September, the Federal Reserve does go ahead with an interest rate cut. BRIAN MOYNIHAN: Yeah, and I think that's the- that's the market consensus is actually more cuts than our team is. Ours is two this year, September, December. Four next year, and a couple next year. But I think one of the concepts you hear out there a lot Margaret is this concept of higher for longer. The reality is our team, and most people think we'll set them with three, three and a half percent Fed funds rate, which is much different than the last 15,17 years people have lived it. So people came into the business world in 2007, 2008 have not seen this kind of interest rate environment. And so we're getting back to normal, and that's going to take a while for people to adjust to. Both on the corporate side and commercial side and on the consumer side. MARGARET BRENNAN: So, I'm not asking a political question here. The Federal Reserve is set up by Congress as politically neutral. It, you know, has to deal with employment and stabilizing prices. This past week, Donald Trump was asked if, as president, he could manage a soft landing of the economy with the current Federal Reserve leadership in place. Here is how he responded. [START SOUND ON TAPE] FORMER PRESIDENT DONALD TRUMP: I feel the president should have at least say in there. Yeah, I feel that strongly. I think that, in my case, I made a lot of money, I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman. [END SOUND ON TAPE] MARGARET BRENNAN: The chairman was appointed by Donald Trump, Jerome Powell, and continues to serve. But what he's talking about now is political leaders influencing or overriding economists in setting the Fed funds rate and setting interest rates. What would be the implication of that? BRIAN MOYNIHAN: I think if you look around the world's economies and you see where Fed central banks are independent and operate freely, they tend to fare better than the ones that don't. And so I think that that's kind of the American way. It's been that way. Does that stop people from giving Chair Powell advice, or other people? No, I give him advice. So we all give him advice. And so I think he ought to be careful, you know, when he goes up and does the Humphrey Hawkins, he gets lots of advice about where rates should go. So there's a lot of people that have a view of it, but their job is to sort through it all and say what's best for the US economy on those two dimensions you talked about and be consistent. I think right now, Brian Moynihan, giving advice, is they got to be more careful than the downside of not starting to move down rates to restore a feeling that, you know, there's light at the end of the tunnel. They've told people rates probably aren't going to go up, but if they don't start taking them down relatively soon, you could dispirit the American consumer. Once the American consumer really starts going very negative, then it's hard to get them back. And on the commercial side, the higher rate environment is slowing down commercial progress, so corporations aren't using their lines of credit. Middle markets, small businesses, they've gone backwards in the use of lines of credit. So why don't they use a line of credit? Either there is an opportunity or the cost is high, or both. And right now, that's a little bit they're worried about the future. So I think right now, it's time for them to start to take the- become a little more accommodative, and take off the restrictions and let the thing put cool. I'm giving them advice. Everybody does, and I think the strong central bank has to take all that advice and process it. MARGARET BRENNAN: It's not unusual during a political campaign to hear some of the populist ideas. But one thing I've heard from Jamie Dimon of JP Morgan, I've heard from you at Bank of America is this concern of when you send checks to people, as we discussed with JD Vance, when you talk about not taxing tips, as now both campaigns are doing that, there is still that hard question of, how does America deal with the debts and deficit it already has. Those conversations just aren't happening. What is that cost? BRIAN MOYNIHAN: Well, I think right now, the cost is not that high. I mean, there's a mathematical cost. As interest rates go up, the debt carry cost goes up for the federal government, just like it goes up for the consumer companies. And so that's a hurt to the economy, because that money could have been used for something else had they not borrowed so much. The second question is, was there more stimulus applied to the covid issues than needed? And the answer is yes, by most economists. Multiple. And so that we gotta let that work its way out of the system. That's what helped inflation, and it happened on both administrations' watch. But the third question really is this question of handling the debt. And at the end of the day, 15 years or so ago, the Bowles-Simpson commission came out with ways to do it. There was an idea: we'll raise taxes. The response to the business community is, if you're going to raise taxes for what. If you're going to do it to pay down debt, you know, individuals and companies would probably say, I got that. We- we've had to wage a war on covid. We won the war. Now we got to move- But we can't just raise taxes and stuff that doesn't really provide product- for productivity or, frankly, help manage the debt. And that's a concern people have that will be a political food fight of high order here for the next few months. MARGARET BRENNAN: And we will definitely be talking about that as we go into 2025, and the expiration of some of those tax policies. Brian Moynihan, it's great to have you here. BRIAN MOYNIHAN: It's always good to be here. Margaret, thank you. MARGARET BRENNAN: We'll be back in a moment.
On paper the stock market should be great, not on a knife's edge. But that's the opportunity 2024-08-11 19:49:00+00:00 - When I look at Thursday's rally, I am beginning to realize that we have become so binary and so up close that we have lost our ability to think about what matters. The big fish data got caught among the minnow minutiae and we ended up with ridiculous rallies that are, therefore, based on nothing. That, of course, tells you that those newfound percentages can be taken away based on nothing. That's how trapped and intellectually devoid we have become. I have now studied every aspect of the runup of that beautiful — for the bulls — session on Thursday, and I can truly say that it was game-set-match in favor of the bulls by 8:30 a.m. ET — one hour before regular stock trading begins. That's when the weekly jobless claims number was released. The components of that print — somehow — made sidelined investors feel more comfortable that the Federal Reserve will cut interest rates without the economy rolling over, so it's all clear to buy. They tackled the opening at 9:30 a.m. ET hard, with the industrials and techs getting the benefit of the doubt. Was it an S & P futures-based program that resurrected stocks, both in the morning and at the close? It got hard to tell. It was that positive a session. How could a number that comes out every Thursday really play the catalyst? The absurdity of it is palpable. I mean you could hire 10,000 actors and then lay them off and you might have had a selloff of gigantic proportions because the hard-landing types would be unfettered. Then again, is that any more outrageous behavior than watching unknown large institutions sell their large-cap U.S. stocks on Monday because Japan's central bank raised rates there, causing an over 12% decline in Japanese stocks in one session? The lunacy of that move and its aftershocks brought Wall Street's fear gauge, the VIX , to a 52-week high of 65.73 intraday, another insane collaterally thoughtless metric that alternately scared some and made others feel the whole thing is overdone. At the same time, the S & P 500 held at certain levels that helped start the fire. For comparison, the VIX was at a 52-week low of 10.62 on July 19. The whole thing was chimerical. Let's step back for a moment and remember where we are: We've been in a precarious earnings season and the havoc dealt to whole sectors screams to be noticed. Whole swaths of positive points were rolled back because of the Japanese-related craziness. For example, this season started with the banks roaring higher on great numbers, legitimately great numbers led by a phenomenal Bank of America quarter. Then less than a month later, we get the unleashed tsunami of selling that seemed particularly harsh on the financials. On top of that came the report of huge selling of Bank of America stock by Warren Buffett as if, somehow, that meant he no longer liked the banks as a group. Nobody questioned whether Buffett was just selling everything not nailed down, including Club holding Apple . Or maybe there's been some passing of the baton and the new manager wants a clean slate. Somehow, though, Buffett doomed the financials in part because he was caught selling the best one. Looking back, of course, the journalistic imperative is to find a reason for that Japanese yen carry trade hangover to legitimize the selling. We can't just say that a bunch of overleveraged cowboys who thought they were immune from mistakes blew out their winning banking positions turning them into losses. Then some old Buffett sell program for who knows what reason came on top of it. We can't say that because it makes us sound stupid. So, we decide that the banks stocks are going down because they historically do badly when the Fed starts cutting rates. We let the story get in the way of the facts. Rate cuts are very bullish for banks. The possibility of credit losses will be stayed. The net interest income (NII) holy grail may give way to loan growth and, in some cases, better expense numbers because off artificial intelligence. We are now well on our way to improving urban areas as recognized by the strength of commercial developers SL Green and Boston Properties. The office building cataclysm seems now behind us. As the yen carry trade was being unwound, we had a whole series of tech companies report earnings. Even as we had a cellphone resurgence, even as we have a personal computer refresh — otherwise hallmark events — all that mattered was excess data center spend and the rumor that Nvidia 's Blackwell chip platform was being delayed indefinitely. Nvidia is, and has always been, an honest company. The rumor couldn't be squelched because Nvidia is in a quiet period ahead of earnings out on Aug. 28. The stock took a beating. Enter 0DTE options — or zero days to expirations options. We're talking about those DraftKings-like instruments that only served to verify the distinctly negative action. I found it hard to believe that we saw obits of Nvidia all week, including stories that said the eyepopping gains made no sense after all. Did anyone stop to think that it is still the number one performer in the S & P 500, having dethroned Super Micro Computer ? Did anyone bother to read or hear what dethroned Super Micro; the fact that it was overwhelmed with orders and couldn't fulfill them? Did anyone bother to check that Club name Meta Platforms apparently placed an order so large that Super Micro misjudged or perhaps overpromised? Was anyone factoring in that one of the great data center companies, Arista Networks , reported a phenomenal set of numbers, signifying that all is well with the buildout? No. The market gods simply pronounced the data story dead, which then reverberated as far as Club industrials Eaton and the even more tangential Dover , was a real decimation that washed over anything good in the semi world. It also took with it a couple of fallen stars, Micron, Dell , Hewlett Packard Enterprise , and Club name Advanced Micro Devices . The later just made no sense because it is pulling away from Intel on the low end and if Nvidia really does have production problems then AMD is the de facto winner. Again, Nvidia gets the blame. In fact, the only stock that didn't suffer from an Nvidia relation, Apple, got through earnings without too much trouble. But it then got eviscerated by Buffett, by the way, said he didn't want to sell Apple when apparently he was selling it at roughly the same time. Maybe that was what shocked people into dumping the stock. It's pretty ironic but the Magnificent Six stocks — we own them all — got pressured by all of this even as the market judged all of the quarters of decent quality except Amazon , which was considered to be an out and out disaster. That made it my favorite one because the story was complicated by minute-to-minute declines in ordering things during major news events including the attempted assassination Donald Trump and the Olympics. Until this quarter, no one thought much of any distraction and weaker sales. We didn't realize how little was made on smaller same-day packages. We totally ignored the unbelievable Amazon Web Services cloud performance, something that was so strong, with giant gross margins, that should have counteracted Amazon Prime weakness on the retail side. I liked the quarter. For those by-and-large excellent quarters we ended up have declines of monumental proportions that almost seem like they are preordained and the beginning of a new bear market. Not only that, we've turned on AI with a vengeance. It now feels like nothing can be gained from it. Some of that thesis is bogus. We just don't really find out how AI is working because many AI customers don't want to dissemble about what's really happening behind the scenes: consultants like Accenture , Deloitte, McKinsey, and E & Y advising execs to hold off on hiring because workers seem to be twice as productive with their AI tools. So, why not get rid of half the people in your organization? Do you really need that many? Who knows? When I meet with executives who are using AI, they are telling me that they aren't sure how many people they need — except it's less than before? No one want to talk about it like that. There is heightened sensitivity to firing people right now, more than expected. So, the pro-AI story line goes unwanted save ServiceNow and maybe the now-disappointing Club name, Salesforce . I can't believe how few executives realize that if they don't start saying how they use AI we are going to start penalizing them, too. I've been saying those two companies have regarded AI as a mainstay of their business. I was hoping to find others. I didn't. Where does this leave us? I think in a place where we are moderately oversold where many just expect a decline or a retest starting this week. I know we are looking for one and want to put the money we took out of the market to build up newer positions that are too small to matter. It's a topic I will talk about at this week's Monthly Meeting livestream for Club members. Lost in the shuffle — other than Apple, which historically traded with a lower multiple — things are cheap. Even Apple, if you regard the service stream as newly paramount, can't be regarded as overwhelmingly expensive. We are getting a chance for the industrials and the aerospace and defense stocks to shine. Everything else seems to be running in place even as we are headed into Fed rate cut world. To recap, despite good fundamentals, despite Fed rate cut(s) coming, despite an increasing likelihood of a soft economic landing, despite the fact that a wall of money might come in from the sidelines because of lower rates, we really do trade miserably. That's unless we get a positive data point of the day as we did last Thursday. It causes us to wonder what we are missing. Is it Vice President Kamala Harris ' seeming wish if she were to become president to raise corporate taxes from favorable moment to one that creates the need for immediate estimate cuts? Is it the prospect of a mercurial Trump if he were to regain the White House who threatens cherished Federal Reserve independence? Right now, we don't know and that makes things all the more fragile, especially because well-known market bears have been trotted out and put on TV regaling us with their prowess even as they have made no money in ages. At least they are not Cathie Wood where you get to see how truly bad she is in terms of picking stocks. Her endless buys at one foolish level are only matched by her endless sells well below that level. We're not sanguine even as I sense we should be, given how tame rates have gotten and how good earnings are. Sure, we are about to get a raft of earnings but only retail seems problematic. No matter, I think there will be buyers galore of Home Depot and Lowe's on some sort of last-bad-quarter thesis. That's one of reasons I am expecting some positive action from our housing related stories. It's what the textbooks tell you to buy at this juncture. Ultimately, though, it's my faith in the data center — buttressed by a belief that Nvidia's roadmap can change things for the stocks of so many companies, including the ones trashed in the last three week — as well as my belief that a beckoning rate cut cycle is inherently good news for the market. It should be a good moment, but it isn't. Hmm? Therein lies the opportunity. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. Jim Cramer. Rob Kim | NBCUniversal
Hollywood icons of the past take new star turn, with celebrity estates cashing in on AI voice cloning deals 2024-08-11 18:53:00+00:00 - Golden Globe winner for best performance by an Actor In A Supporting Role "Boogie Nights" Burt Reynolds on stage during the 55th Annual Golden Globe Awards held at the Beverly Hilton Hotel on January 18, 1998. Stars from Hollywood's golden age are being reborn through celebrity estate AI voice cloning deals, a sign of how some of the "Wild West" concerns about unauthorized AI impersonation are being addressed by new business models. ElevenLabs, an audio technology startup funded by venture capital firms including Andreessen Horowitz and Sequoia has penned multiple deals with the estates of legendary actors for its IconicVoices tool that allows users to have AI-generated voices read to them via an audiobook app. The stars include Burt Reynolds, Judy Garland, James Dean and Sir Laurence Olivier. ElevenLabs, which launched in 2023, creates audio for books and news articles, video game characters, film pre-production, and social media and advertising. The company already works with publishers including the New York Times and Washington Post and earlier this year, the company was selected by Disney to join its accelerator program. "You need around 30 minutes of high-quality audio to create a professional voice clone," said Sam Sklar, a member of ElevenLabs' growth team, and the voices are generated from the celebrity's catalog. Once created, it can be called upon to read text (articles, PDFs, ePubs, newsletters, or other text content). However, the voice and content are not able to be exported, with all of the listening in a reading app. A user could, for instance, have articles narrated to them by James Dean within the app, but users cannot access the voices for any content not already in the app. These kinds of deals could help set the boundaries for a future in which AI-generated voice content is less contentious and more of a controlled, curated terrain. Google Play and Apple Books utilize AI-generated voices to some extent already, though there are high hurdles to recreating human voice pacing, intonation and emotion. The AI industry has been plagued by concerns about use of celebrity voices, with OpenAI doing an about-face in Mayafter actress Scarlett Johansson accused the company of ripping off her voice after she rejected offers to license it. "We're very alive to the risks associated with synthetic media and take the safe use of our tools incredibly seriously," Sklar said. Safeguards include active moderation of content, accountability enforceable with bans, and special provisions for safeguarding the impact of AI voice on the 2024 election. Among the current generation of actors, there remains significant anxiety surrounding the use of AI in generating voice content. Voice actors for video games have raised concerns, and last year's film and television strike had significant roots in anxieties over the use of AI. The use of iconic voices sold by estates is a market niche that potentially avoids these pitfalls, representing a new income stream from AI rather than a lost income stream because of AI. The use of soundalike celebrity voices is an issue that predates AI, such as the 1988 case of Frito Lay using a Tom Waits soundalike in their ads, and another Waits' case in 2007, after Waits himself had long refused advertising deals. AI presents an easier path to creating soundalikes, and recent lawsuits levied against AI startup Lovo for allegedly inappropriate and uncompensated use of voice actors in generating its AI voices is a reminder that the world of AI voice generation is likely to some degree to remain a complicated, litigious one. (Lovo has denied the claims in the suit and also pointed to a revenue-sharing model it offers actors for cloned voices.) It's difficult to assess the protections in places without reviewing the specific language of the IconicVoices contracts, said Steve Cohen, a partner at Pollock & Cohen who is representing voice actors in an unrelated lawsuit alleging cloning of voices without permission. ElevenLabs points to the way that its IconicVoices tool attains permissions and curates usage of the voices. "Giving permission for using one's voice is one of the basics," Cohen said. "I think the key factors are permission, compensation, and control." New, clearer laws may also be a disincentive to people tempted to improperly appropriate a voice, "not for hardcore bad guys, but for edge cases," Cohen said. But quoting Bette Davis in "All About Eve," he added, "'Buckle your seatbelts; it's going to be a bumpy ride.'" How realistic cloned voices sound is also an evolving issue. Many experts say that because AI doesn't "know" what it's saying, performance quality is limited. Sklar said ElevenLabs' latest level of speech quality is indistinguishable from real human speech. "The text-to-speech tools from ElevenLabs can understand the context of the words," he said. AI is only as good as the models on which it is trained, and the actors' voice datasets become part of the process. "Neural models derive their capabilities from mimicking/memorizing nuances and patterns present in their training data," said Nauman Dawalatabad, a postdoctoral associate at the MIT Computer Science and Artificial Intelligence Laboratory with extensive research in AI voice generation. "The quality and diversity of training data significantly influence the model's performance." The vocal delivery of movie stars could add to the AI mimicry and learning by providing the kind of "high-quality voice datasets for training and fine-tuning large models" that Dawalatabad said is essential to the process. But he expressed reservations about "sounding human" as being the right test for the AI voice field, as that could reinforce an antagonistic relationship between human and synthetic voicings. Voice actors remain divided on the technology, with some refusing to consider any deals but others saying opportunities to clone their voices for speedier, cheaper production on some forms of audiobooks can't be ignored. "AI technology can help workflows. AI is not a new tool for voice talent, producers, and publishers, many of whom use it to improve their quality control in post-production," Michele Cobb, executive director of the Audio Publishers Association, told CNBC last year. Recent generative models have shown substantial advancements compared to earlier iterations, making it increasingly difficult to distinguish between fake and authentic voices by ear alone, according to Dawalatabad. AI voice licensing could alleviate workload for voice actors, he added, without supplanting them, as they "intercede in the process by focusing on offering correction or enhancement to ineffable aspects such as intonation, warmth, and emphasis, which still present challenges."
LVMH puts mark on Olympics as luxury brands embrace sports 2024-08-11 18:52:00+00:00 - The 2024 Paris Olympic Games medals are displayed inside a custom-designed trunk manufactured by Louis Vuitton, an LVMH brand partner of the Paris Olympic and Paralympic Games, during a gathering at LVMH in Paris on July 22, 2024, ahead of the start of the 2024 Paris Olympic Games. Whether it's the Moët champagne poured to celebrate a win or the custom trunks that Louis Vuitton has made for medal ceremonies, luxury has been on full display at the 2024 Paris Olympic and Paralympic Games. To Carly Duguid, the creative director for tennis and fashion star Naomi Osaka, luxury fashion and athletics are the perfect combination. "There's a strong parallel between athletes and brands in their commitment to quality and excellence," Duguid told CNBC. In the influencer age, fashion has quickly embraced the sports world and elevated athletes as fashion tastemakers. These global stars help connect brands to a whole new market of fans and potential new buyers. Osaka was the first athlete to partner with Louis Vuitton, whose roster now includes Victor Wembanyama, Carlos Alcaraz, and many French Olympians and Paralympians. LVMH is not alone. Gucci has an ambassadorship with British soccer player Jack Grealish and put billboards across cities featuring Italian tennis champion Jannik Skinner. At the 2024 WNBA draft, Caitlin Clark was the first professional basketball player ever dressed by Prada, and continues to don classic designer wear all season. Dozens of luxury designers outfitted national teams for the first time for the opening ceremony, marking not only new ties between athletics and fashion, but athletics and the Olympic Games. LVMH has looked to make a big splash beyond just athlete partnerships, becoming the first luxury brand to be an Olympic sponsor. The roughly $160 million investment, which represents nearly 1% of LVMH's 2023 profits as the parent company of brands like Celine, Louis Vuitton, Loewe, Sephora, and Dom Perignon, has provided luxury touchpoints to the Games, from the Chaumet-designed medals to French athletes wearing Berluti-designed outfits at the opening ceremony and medal bearers wearing vintage-style, distinctly French LVMH uniforms.
Vance hails Trump’s Fed idea and pushes back against criticism over past words on American families 2024-08-11 18:03:05+00:00 - ATLANTA (AP) — Republican vice presidential nominee JD Vance used a round of Sunday news show appearances to disparage the Democratic ticket and promote Donald Trump’s record and second-term plans and defend himself from criticism over past remarks that have become a campaign issue. The Ohio senator, in a series of taped interviews, said there was merit to Trump’s suggestion that presidents have more control of U.S. monetary policy and kept up the GOP line that Minnesota Gov. Tim Walz, the Democrats’ vice presidential candidate, had exaggerated his military record. Vance, who shadowed Vice President Kamala Harris and Walz during their visits to several battleground states last week, was quizzed about abortion and his past comments about American family life, among other topics. Some highlights from his appearances: Trump is right on Fed independence, Vance says Trump recently suggested that presidents “should have at least a say” on monetary policy set by the Federal Reserve. He did not offer specific proposals. Curtailing the Fed’s independence from political interference as it determines interest rates would be a fundamental change. Even as he tried to argue that Trump said nothing about taking “direct” control of rates, Vance endorsed Trump’s general idea. “President Trump is saying I think something that’s really important and actually profound, which is that the political leadership of this country should have more say over the monetary policy of this country,” Vance said. “I agree with him. That should fundamentally be a political decision. Agree or disagree, we should have America’s elected leaders having input about the most important decisions confronting our country.” Bank of America CEO Brian Moynihan questioned the wisdom of such a major change. “I think if you look around the world’s economies and you see where Fed central banks are independent and operate freely,” he said, “they tend to fare better than the ones that don’t.” Mining Walz’s military record Walz served 24 years in the Army National Guard and was once deployed to Europe, though never to an active war zone. In a video from 2018, he referred to carrying weapons “in war.” The Harris campaign said last week that Walz misspoke. “Scandalous behavior,” said Vance, a military veteran. When it was noted that Trump avoided Vietnam with dubious claims of bone spurs, Vance said that “obviously a lot of people have reasons for not serving. I criticize somebody for embellishing their record, for lying, saying, ‘I went to war.’” Transportation Secretary Pete Buttigieg, a combat veteran and a top Harris ally, said Republicans are circulating “the one time” that a long-serving veteran “slipped up” talking about his military service. Medical abortion and Florida’s referendum Vance dodged when asked about his position on an upcoming Florida referendum that would repeal Republican-passed abortion restrictions and ensure more access to abortion services. Speaking broadly about states and reproductive rights, Vance said Trump “has said explicitly they’re going to make this decision on a state-by-state level.” Vance struggled to clarify Trump’s position on whether he would support federal limits on the medical abortion drug mifepristone. Trump said in his June debate with Biden that he would not block it. At his Florida news conference last week, he offered a disjointed answer and said, “You also have to give a vote” on the matter. Vance suggested that “maybe” Trump had difficulty hearing and understanding a reporter’s question. What to know about the 2024 Election Today’s news: Follow live updates Ground Game: Sign up for AP’s weekly politics newsletter AP’s Role: The Associated Press is the most trusted source of information on election night, with a history of accuracy dating to 1848. Learn more. Walz responded in a statement through the Harris campaign that Trump and Vance “are going to ban medication abortion. ... Vice President Harris and I will make sure that you make your health care decisions because we have a rule, whether you’d make the same decision as someone else: Just mind your own damn business.” Vance and Buttigieg’s back-and-forth on family During Vance’s Senate campaign in 2021, he said in a Fox News interview that “we are effectively run in this country via the Democrats,” and referred to them as “a bunch of childless cat ladies who are miserable at their own lives and the choices that they’ve made and so they want to make the rest of the country miserable, too.” He said that included Harris, who has two adult children, and Transportation Secretary Pete Buttigieg, who is gay and a married father of twins but had no children at the time of Vance’s comment. The senator said a “sarcastic remark I made three years ago” has obscured a serious debate about “pro-family” policies, explaining that “I criticize people for being anti-child” in their policy pursuits. Vance also in the past has suggested giving extra votes for people with children. “It’s not a policy proposal. It’s a thought experiment, right?” he said in a Sunday interview, arguing he was reacting to others’ ideas to lower the voting age. “Anybody who disagrees with him is anti-child?” Buttigieg countered in a news show appearance. “He seems incapable of talking about a vision for this country in terms of lifting people up. ... It’s always about disparagement.” ___ Vance appeared on CNN’s “State of the Union,” ABC’s “This Week” and CBS’ “Face the Nation.” Buttigieg was on CNN and Moynihan was on CBS.
Here's why the creator of Gmail thinks Google fell behind in the AI arms race 2024-08-11 17:55:17+00:00 - By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time by visiting our Preferences page or by clicking "unsubscribe" at the bottom of the email. Access your favorite topics in a personalized feed while you're on the go. download the app Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Google should be dominating the AI arms race — right? When Google's cofounders, Larry Page and Sergey Brin, launched the company in 1998, they envisioned it as an AI company, Paul Buchheit, the creator of Gmail, said on a recent episode of the Y Combinator Startup podcast. Over the years, it gathered the building blocks to do so: volumes of data, high-level talent, and computational resources. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. But Google's AI rollouts have been anything but groundbreaking. Its new AI search feature, AI Overviews, promised to deliver neat, AI-generated summaries with Google search results. Within days of its release in May, though, it was generating strange responses, like telling users to put glue on pizza. The company also lost $100 billion in market value in a single day in April when its then ChatGPT competitor, Bard, spit out a wrong answer during a demonstration. Advertisement Buchheit — who is also credited with coming up with Google's original motto, "Don't be evil" — thinks Google may have lost its way when it reorganized under its new parent company, Alphabet, in 2015. The founders stepped back, and CEO Sundar Pichai took the helm. That's when its focus shifted to preserving its monopoly over search, Buchheit said. "They have, you know, this gold mine, like search is just so valuable," he said. Meanwhile, "AI is an inherently disruptive technology." Related stories When you directly answer queries from users — the way a chatbot like OpenAI's ChatGPT might — you disincentivize them from clicking on ads, he explained. "A search company has an inherent tension between profitability and giving the right answers because there's always a temptation that if you make your results worse, people will actually click on more ads," Buchheit said. Advertisement That's not just Buchheit's analysis; it's something Page and Brin noted in their seminal 1998 paper introducing Google. They said search engine technology has been "largely a black art" and "advertising-oriented." With Google, however, their goal was to "provide high-quality search results over a rapidly growing World Wide Web."
A wildfire near Greece’s capital darkens the skies over Athens and advances fast 2024-08-11 17:36:07+00:00 - ATHENS, Greece (AP) — A wildfire burned northeast of Athens on Sunday, darkening the sky as the smell of smoke and soot pervaded the Greek capital. More than 400 firefighters, 110 fire engines and a large number of volunteers were fighting the fire, which broke out around 3 p.m. local time around 35 kilometers (22 miles) from Athens. The 15 firefighting planes and nine helicopters were operating by late afternoon but stopped at sunset. The flames were moving fast toward Lake Marathon, an important reservoir supplying Athens with water, said Fire Col. Vassileios Vathrakogiannis, a spokesman for the fire department. An unknown number of houses have been damaged. A car burns in Varnava village during a wildfire, north of Athens, Greece, Sunday, Aug. 11, 2024, with many regions of the country on high alert due to high temperatures and wind speeds. (AP Photo/Michael Varaklas) A firefighter sprays water with a hose in Varnava village during a wildfire, north of Athens, Greece, Sunday, Aug. 11, 2024, with many regions of the country on high alert due to high temperatures and wind speeds. (AP Photo/Michael Varaklas) A house burns in Varnava village during a wildfire, north of Athens, Greece, Sunday, Aug. 11, 2024, with many regions of the country on high alert due to high temperatures and wind speeds. (AP Photo/Michael Varaklas) Vathrakogiannis said winds reached gale force strength in the area of the fire and flames exceeded 25 meters (80 feet) in height. Residents of the villages near the area of the fire have been warned by emergency text messaging to evacuate. Late in the afternoon, messages were also sent to residents of some northern Athens suburbs to do the same. Police said they evacuated more than 200 individuals, mostly elderly and others who did not heed the warnings. Another fire that broke out west of Athens has been contained, the spokesman said. Hot and dry weather, made worse by strong winds, increases the danger of wildfires. June and July were the hottest months ever recorded in Greece, which also recorded its warmest winter ever. Both meteorologists and government officials have warned of the heightened danger of wildfires because of weather conditions from Sunday until Thursday. Half of the country will be under a “red alert,” Climate Crisis and Civil Protection Minister Vassilis Kikilias said.