Fundstrat's Tom Lee disagrees with the idea of a stock market bubble driven by the hype around artificial intelligence. He compares Nvidia's
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2023-07-27 | Sign Up | View Online | Advertise
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Market Snapshot 📷
S&P 500 4,566.75 -0.02%
Nasdaq 14,127.28 -0.12%
Dow 35,520.12 +0.23%
10-Year 3.865% -0.047%
Oil 78.92 -0.89%
Gold 1,975.60 +0.61%

*All data as of the previous day’s market close.

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Markets & Economy
Fed raises interest rates, leaves door open to another increase (2 min read)

The Fed hiked rates by another 0.25%, setting the key rate between 5.25% to 5.50%, the highest in 22 years. The Fed described the economy as growing at a "moderate" pace and no longer forecasting a recession. The central bank left the door open for further rate increases depending on incoming data and the impact of previous hikes on the economy. Although the next rate hike is uncertain, some Fed policymakers expect one more increase this year.
Economists do U-turn on recession odds as most now see it as unlikely (2 min read)

Top economists have changed their views on a potential recession, with most now skeptical about one happening in the next year. A survey by the National Association for Business Economics shows that 71% of economists believe the odds of a recession in the next 12 months are 50% or less. This optimism is a shift from previous months when economists were more evenly split on the matter. The change in sentiment is driven by rising positive economic indicators and several other prominent investors have also recently shared similar optimism.
The Dow just posted its best winning streak since the 1980s (3 min read)

The Dow Jones Industrial Average is on a historic winning streak, rising for 13 consecutive days as of Wednesday's close. It has outperformed other indexes, gaining 5% during this run. One key reason for its momentum is easing recession fears, as data shows inflation coming down and the possibility of the Fed halting interest rate hikes. Strong economic data and positive earnings reports from Dow's component companies have also contributed to the rally.
Business & Stocks
Think there's an AI bubble in the stock market? Think again (3 min read)

Fundstrat's Tom Lee disagrees with the idea of a stock market bubble driven by the hype around artificial intelligence. He compares Nvidia's stock performance to Cisco during the 2000 dot-com bubble and highlights that Nvidia would need significant growth to be considered a true bubble. Lee points out that mega-cap tech stocks are not at all-time highs, and fund flows show investors are more fearful than enthusiastic about stocks. Charts and analyses supporting his argument are available in the article.
Google Earnings Beat Views Amid Rising AI Investments To Drive Ad, Cloud Growth (2 min read)

Alphabet's stock surged 6.2% after beating Q2 earnings expectations with revenue boosted by cloud computing and YouTube. Its YouTube ad revenue rose 4% while cloud computing revenue jumped 28%. The company’s cost-cutting also improved profit margins, and AI investments are expected to drive advertising and cloud revenue growth. The positive results reversed a four-quarter decline in earnings growth, and analysts expect further acceleration in the second half of 2023.
Meta reports 11% jump in revenue and issues optimistic guidance for Q3 (2 min read)

Meta's revenue increased by 11% in Q2 due to a rebound in advertising. Both earnings and revenue were higher than analysts’ expectations for the quarter. The company also forecasts revenue of $32 billion to $34.5 billion in Q3, which indicates at least 15% growth year-on-year. This is the first time Meta reported double-digit growth since late 2021. Shares of Meta jumped over 7% in the after-hours trading on Wednesday following the quarterly report releases.
Funds & ETFs
10 Best Small Cap Value ETFs by Performance (4 min read)

Small-cap value ETFs are gaining popularity as investors look beyond expensive large-cap growth stocks amid a market rally. These ETFs typically follow a value investing approach and invest in undervalued small-cap companies. Most are usually passively managed but some are actively managed with higher risks and volatility, but also potential for higher returns. This article discusses small-cap value ETFs in detail and lists the top 10 performers in the past year.
These ETFs Could Be a Hedge Against Another Rate Hike and Inflation (2 min read)

Although US inflation has cooled this year, it still remains relatively high and the Fed may continue rate increases to bring it down. For investors concerned this might impact their portfolios, this article suggests Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL) and Vanguard Short-Term Inflation-Protected Securities ETF (VTIP) as potential hedges. These funds invest in inflation-protected securities and offer protection from rising interest rates but in exchange may yield lower returns.
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