QQQ•Today's Key Reads
Today's Key Market Moves
The Nasdaq sailed to a new high on Tuesday, lifted by a wave of positive momentum around the AI outlook and another decline in global oil prices, while investors turned their attention to the US-China leaders' summit in Washington later this week.
In my column today, I look at the US-China artificial intelligence arms race, and what's behind the sudden outbreak of apocalyptic warnings about the technology's threat to mankind. These warnings have proliferated just as worries are deepening that China's cheaper AI will expose the expensive US model as highly uneconomical.
After the flurry of major central bank decisions over the last 10 days comes the even bigger flurry of policymaker speeches, interviews, and media appearances. Do market expectations move all that much from where they were the day of these decisions and press conferences by chiefs Warsh, Lagarde, Ueda and Bailey? Not really, because the general consensus views and likely policy paths, such as they exist, have already been laid out.
There are 19 Fed policymakers (although only 12 voters at any one time), and 27 ECB rate-setters - that's a lot of commentary for investors to ignore. The BoE and BOJ's nine-strong policymaking committees are positively lean by comparison. Investors are more likely to take their lead in the coming days from elsewhere - fresh economic data, corporate developments, geopolitics, Middle East energy supply shifts.
Global oil prices are back below $100 a barrel, with Brent and WTI crude futures falling on Tuesday for a fifth straight day. That's the longest downward streak for both benchmarks in over a year. Could the market be at a turning point? Has the second oil shock of the Iran war come and gone? It would probably be unwise to be too confident, but a peace deal in the offing and more supply potentially coming back onto the market could have a significant impact.
All that is hypothetical right now. Oil is still up 50% from a year ago, and analysts estimate that up to half of the US inflation overshoot is down to elevated energy and commodity prices. But a sustained decline would wipe much of that away, and call into question the recent strengthening of market rate hike expectations - and policymaker signaling - across much of the developed world.
The United Nations General Assembly is in full flow, with nearly 130 world leaders gathered in New York. That's not a great turnout, which may reflect the old world order of multilateralism, globalization and cross-border cooperation gradually giving way to one characterized more by nationalism, bilateral agreements and de-globalization. The biggest 'no-show' is Chinese President Xi Jinping, who will meet Trump in Washington later this week.
Trump addressed the UN assembly today (prompting a walkout by the Cuban delegation), and UN Secretary-General Antonio Guterres gave his final address, in which he called for greater curbs on AI. One wonders how many world leaders will be showing up at the annual jamboree in 5 or 10 years' time (presuming AI hasn't wiped out mankind by then).
