The Pulse on the Economy and Capital Markets: June 12 – 16, 2023 

To Summarize: The stock markets continue to surprise with another strong quarter as the Federal Reserve places a pause on interest rate hikes. Investor excitement over artificial intelligence (AI) capabilities overshadows implementation and monetization challenges from the tech sector. We unpack this and more in the June edition of The Pulse.

In the Markets: Globally, the stock markets remain strong with the Nasdaq and S&P 500 surging over the potential of AI. However, the bond markets have been mixed as government and corporate investment grade bonds decline while junk bonds rise. Despite the Federal Reserve putting a pause on raising interest rates at its last meeting, projections show interest rates moving higher than expected before the end of the year. 

Consumers Desire Travel & Leisure: Summer is finally here, and credit card companies have reported that travel, leisure and entertainment bookings are higher than ever. While this sentiment remains true, the pace of spending has notably declined since last year, especially on goods and services as consumers are growing more cautious. 

The Impact of AI: AI has investors and the market excited, but the impact on portfolios and businesses remains unclear. Surprisingly, many tech companies believe it is too early to tell as many questions are left unanswered — how will AI generate revenue? How will it be implemented? How will businesses use AI? For now, the approach seems to be wait and see rather than aggressively allocating capital towards AI, unless you are a leading tech company with a huge balance sheet, such as Amazon or Google. 

Top Headlines: We’re reading about transpacific shipping times, the Reddit crisis over its treatment of developers, how Palantir is helping hospitals, and a mid-June update of the housing market. 

Related resources:

• Transpacific shipping times return to pre-supply chain challenged levels
• Reddit is in crisis as prominent moderators loudly protest the company’s treatment of developers
• How Palantir is helping hospitals with tasks that used to require spreadsheets and whiteboards
• Current state of the housing market as of mid-June
• Year-over-year rent growth continues to decelerate