July CPI report shows inflation gauge rose 3.2%, less than expected (3 min read)

The US Consumer Price Index (CPI) rose 3.2% year-over-year and 0.2% month-over-month in July. The core CPI, which excludes food and energy, also rose 0.2% monthly and 4.7% annually. These data all rose slightly below the average economists' and analysts' expectations. Rent prices surged, and shelter costs were the major factors in the monthly increase of core inflation. Despite the inflation rate remaining above the Fed's target, it continues to decline from its highs and markets are mostly expecting the Fed to pause its rate hikes in September.

AI will be at the center of the next financial crisis, SEC chief says (2 min read)

Gary Gensler, Chairman of the SEC, has warned that AI poses a risk of triggering future financial crises. He believes rapid technological advancement could increase the interconnectedness of financial systems, making them harder to regulate. He also stated that AI companies could dominate tools relied upon by businesses and finance, centralizing the system and leading to greater dependence on the same information, increasing crash susceptibility. This prompted the SEC to propose rules to address the rise of such issues in the future.

Disney Rises as Cost Cuts, Hollywood Strikes Save $3 Billion (3 min read)

Shares of Walt Disney showed some life on Thursday, rising nearly 5%, after the company said losses for its streaming services have narrowed and it is pointing to lower spending. Walt Disney now anticipates content spending to be around $27 billion this year, compared to its usual $30 billion, partially due to production cuts linked to the Hollywood strikes. The company also plans to crack down on password-sharing like rival Netflix did in recent months and reiterated its ambition to pay a modest dividend this year.

Alibaba Takes Step Toward Comeback as Growth Finally Returns (5 min read)

Alibaba has reported a better-than-expected 14% rise in revenue, marking its return to growth across all main divisions despite China's economic challenges. The strong performance is seen as a step toward a comeback after over a year of struggle due to the pandemic and regulatory crackdowns. Alibaba's expansion was driven by cost cuts of 6% and improvements in its various divisions, including a reversal of decline in the cloud division and solid growth in overseas operations. However, uncertainties still remain amid regulatory changes in China.

Sector ETFs Attracted $7.5B in July (2 min read)

Investors increased risk appetite in July, pouring $7.5 billion into sector ETFs, the most since October last year. ETFs saw $54 billion in inflows, with $40 billion into stock funds, signaling investors’ willingness to embrace the market rally this year. Cyclically sensitive sectors gained $8 billion, while defensive sectors experienced outflows. Financials and energy attracted the most inflows, driven by bets on an improving economy, while tech saw $400 million in outflows due to profit-taking.

A Guide to Leveraged and Inverse ETFs (7 min read)

Earlier this week, I shared an article that discusses a case where a financial advisor misused leveraged ETFs in clients’ portfolios which led to around $2 million in losses. These ETFs aim to provide amplified returns linked to daily index movements, with leveraged products offering multiple times the gains while inverse funds deliver opposite returns. Despite the controversy, it has been attracting investor interest with over $94 billion in assets. This article is a detailed guide on these ETFs for those interested in assessing whether they are suited to their portfolios.

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Thomas

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