David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Stocks Drop as Powell Signals No Fed Cuts For Now

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    Instead, the FOMC will take into account various factors “in determining the extent to which additional policy firming may be appropriate.”

    “That’s a meaningful change that we’re no longer saying that we anticipate” further increases, Chair Jerome Powell said at a press conference after the decision, when asked whether the statement is a signal that officials are prepared to pause rate increases in June. “So we’ll be driven by incoming data, meeting by meeting, and we’ll approach that question at the June meeting.”

    The increase lifted the Fed’s benchmark federal funds rate to a target range of 5% to 5.25%, the highest level since 2007, up from nearly zero early last year. The vote was unanimous, and Powell said support for the 25 basis-point rate increase was “very strong across the board.”

    Whether that rate will prove to be high enough to bring inflation back to the Fed’s 2% target will be an “ongoing assessment” based on incoming data, Powell said, adding later that Fed officials’ outlook for inflation does not support rate cuts.

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    4 dangers that most worry AI pioneer Geoffrey Hinton

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    Researchers have long noted that artificial neural networks take much more time to absorb and apply new knowledge than people do, since training them requires tremendous amounts of both energy and data. That's no longer the case, Hinton argues, noting that systems like GPT-4 can learn new things very quickly once properly trained by researchers. That's not unlike the way a trained professional physicist can wrap her brain around new experimental findings much more quickly than a typical high school science student could.

    That leads Hinton to the conclusion that AI systems might already be outsmarting us. Not only can AI systems learn things faster, he notes, they can also share copies of their knowledge with each other almost instantly.

    “It’s a completely different form of intelligence,” he told the publication. “A new and better form of intelligence.”

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    Scientists Warn on Climate as Australia Unlocks Giant Gas Region

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    Scientists warned about the potential climate impact of shale gas production in Australia’s Northern Territory as the region — which had previously banned fracking — confirmed it will allow developers to seek approvals for projects.

    The territory aims to exploit a sub-basin estimated to hold about 100 times Australia’s existing natural gas production after implementing a series of recommendations made when it lifted curbs on hydraulic fracturing in 2018.

    “Our highly prospective onshore gas resources will support our energy security during the transition to renewables — and will improve living standards for all Territorians,” the region’s Chief Minister Natasha Fyles said in a statement. 

    Development of onshore gas projects in the region — twice the size of Texas and with a population of less than 250,000 — has been a hugely contentious issue in Australia for years, pitting climate campaigners against resources companies that argue new local production is required to meet domestic energy demand. 

    Prime Minister Anthony Albanese’s national government, which took office last year, has legislated more stringent emissions reduction targets, though also backs the role of gas in the nation’s energy mix, vowing to protect consumers from supply shortfalls.

    Industry estimates suggest that the flagship Beetaloo Sub-basin alone could hold about 500 trillion cubic feet of gas, according to the Northern Territory government — more than three times annual global consumption and a quarter more than all proved US shale gas reserves. It’s part of an even larger basin called McArthur. 

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    Chegg Sinks 48% as ChatGPT Threatens Growth Outlook

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    Chegg Inc. tumbles as much as 48%, its biggest drop since November 2021, after the online educational services company warned that ChatGPT was threatening growth of its homework-help services, making it one of the first companies to highlight generative AI’s negative impact on business. Jefferies cut the recommendation on the stock to hold from buy, saying the AI overhang is starting to impact fundamentals. 

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    US Vacancies Fall, Layoffs Jump in Sign of Softer Job Market

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    Vacancies at US employers fell in March by more than forecast and layoffs jumped, indicating softening demand for workers.

    The number of available positions decreased for a third-straight month to 9.59 million from nearly 10 million a month earlier, the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, showed Tuesday. That was the lowest in nearly two years and fell short of the median estimate in a Bloomberg survey of economists.

    The data point to a gradual moderation in labor demand, which should eventually bring the job market into better balance and alleviate upward pressure on wages. While some companies — notably in technology and finance — have cut employees, the labor market as a whole remains resilient and has been a stalwart between the US and recession.

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    Oil Tumbles as Low Trading Volumes Make for an "Investor Desert"

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    “The market is an investor desert,” said Scott Shelton, an energy specialist at ICAP. “The fundamental information that generates predictable price action doesn’t exist.”

    Adding to the bearish sentiment, vacancies at US employers fell to an almost two-year low in March, a fresh sign of a softening labor market. Activity in China’s export-tilted manufacturing sector missed estimates in April, a possible sign of a recession among customers in the US and Europe. And Iranian Oil Minister Javad Owji said the country has increased output to more than 3 million barrels a day, providing additional supplies to the market.

    “It’s going to take some evidence in the physical market on the tightening we see in our balances before we see any more positive or committed trading activity,” Emily Ashford, an energy analyst at Standard Chartered Bank, said by phone. 

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    BOJ's Ueda Gains Flexibility After Scrapping Guidance on Rates

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    The central bank also called for a long-term review of its policies and issued new price forecasts that show inflation below 2% again in the fiscal year ending March 2026. 

    The decision to keep stimulus in place in pursuit of stronger inflation keeps the BOJ in a very different place to its price-fighting global peers for now. 

    While the wave of policy tightening around the world to weaken inflation appears close to peaking, the Federal Reserve still looks set to push up borrowing costs further when it meets next week.

    That possibility still seems a long way off for the BOJ, given a reiterated commitment in Friday’s statement to continue easing with yield curve control.  Still, Ueda later clarified that policy could be changed including a normalization during the review process.

    “We’re not starting the review with the aim of normalizing,” Ueda said. “But it’s not zero chance we begin normalizing during the review period.”

    For now, the risk of a premature tightening move stopping the BOJ from achieving its price target is greater than the cost of a delayed move, he said.


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