Good morning. President Donald Trump shared his thoughts on the artificial intelligence debate yesterday, responding to alarming warnings from researchers regarding the technology’s potential dangers. Here’s a summary of his statements.
Stock futures are looking up this morning, following a drop in all three major averages during Thursday’s session.
Here are five essential updates for investors as they prepare for today’s trading:
1. Hotter and hotter
As investors gear up for the week’s final trading day, inflation, oil prices, and the Federal Reserve are at the forefront of everyone’s mind. The consumer price index, a critical measure for the Fed ahead of its rate decision next week, indicated that prices have continued to rise in August.
Key takeaways:
- The CPI increased by 0.4% last month and 3.4% year over year, both figures matching analysts’ forecasts. Core CPI, which omits food and energy prices, rose by 0.3% for the month, slightly above expectations.
- This report follows Thursday’s producer price index, which also grew by 0.4% for the month, with the annual rate rising to 5.4%, a bit hotter than predicted. Rising energy costs heavily influenced this surge, with diesel prices soaring 24.1%.
- High oil prices are adding to the economic pressure. U.S. crude prices surged nearly 4% on Thursday, surpassing the $100 a barrel mark once more. Additionally, U.S. diesel prices reached an unprecedented $6 per gallon overnight.
- Following the PPI report and the spike in oil prices, traders increased the likelihood of a quarter-point rate hike next week above 70%.
- As investors reflect on the CPI data, stock futures are trending upward in premarket trading, signaling a potential end to a four-day losing streak.
2. Revenue race
Oracle shares climbed 7% in premarket trading after the company surpassed earnings expectations and announced a more than doubled revenue from cloud infrastructure. Overall revenue jumped by nearly 30% to $19.35 billion, with cloud revenue soaring 62% to $11.61 billion.
However, as noted by Jordan Novet, this growth comes at a significant cost. Oracle spent $28.5 billion on capital expenditures last quarter—over three times what it spent a year prior—as the company rushes to expand data centers. The negative free cash flow recorded was $5.4 billion, and Oracle now carries a staggering $125 billion in debt.
Despite these numbers, demand doesn’t seem to be dwindling. Oracle ended the quarter with remaining performance obligations valued at $664 billion, a measure of future contracted revenue. Additionally, during the quarter, the company secured over $30 billion in new AI contracts.
3. Check, please
Trump’s recent promises to distribute cash directly to Americans are facing scrutiny regarding their costs, effectiveness, and potential legal issues.
On Wednesday, Trump announced that every adult U.S. citizen would receive a $5,000 “dividend” if Republicans retain control of both chambers of Congress following the November elections. This initiative would carry a price tag exceeding $1.2 trillion and drew immediate criticism from Democrats, as well as concerns from some conservatives. The proposal also raises legal dilemmas since it ties the payments to electoral outcomes.
On Thursday, the White House revealed that nearly 1 million individuals will begin receiving $500 Obamacare refunds starting in October. Health policy experts pointed out that these checks would only cover a small fraction of the high costs that some households face since the expiration of enhanced Affordable Care Act subsidies.
4. Junior partner
OpenAI is making strides in Wall Street’s operational tasks.
On Thursday, it introduced ChatGPT for Financial Services, a modified enterprise product developed in conjunction with Morgan Stanley and Evercore. This tool can conduct company research, analyze financial data, and create presentations—traditionally tasks assigned to junior investment bankers.
OpenAI asserts that this technology will enhance banker productivity rather than replace them. However, this rollout prompts a crucial question for an industry reliant on an apprenticeship model: if AI takes over much of the research and pitchbook activities that train new bankers, how will Wall Street cultivate its future dealmakers?
5. Remembering 9/11
As we reach the 25th anniversary of the September 11, 2001 attacks that reshaped air travel, some security rules that have become part of the flying experience are beginning to ease.
Travelers can now keep their shoes on when passing through regular checkpoints, reversing a regulation implemented after the 2001 “shoe bomber” incident. Additionally, the TSA recently announced a new program called “Gateside,” allowing eligible travelers at 13 airports to access post-security areas, even if they are not flying, thus restoring the opportunity for family and friends to meet at the gates.
While some past security measures are fading away, as noted by Leslie Josephs, officials are now facing a new set of threats, including drones, cyberattacks, and advancements in AI.
The Daily Dividend
Here are a few stories worth revisiting over the weekend:
