Morning Reads


Todays Open Interest Change




As generative AI systems take many industries by storm, calls have been growing on the need to regulate emerging tools and address the potential downsides of the technology. Just last week, the CEO of OpenAI, the creator of ChatGPT, testified to Congress about the necessity of government intervention for mitigating the risks of increasingly powerful artificial intelligence models. While lawmakers didn't arrive at any specific proposals at the first AI hearing on Capitol Hill, several ideas were brought up and more are now on the horizon.

Snapshot: In response to "one of the most powerful technologies of our time," the Biden administration is taking new steps to "advance responsible artificial intelligence." The first is updating its roadmap, called the National AI R&D Strategic Plan, which outlines key priorities and goals for federal investments in AI research and development. It also released a new request for public input on critical AI issues, like "protecting individuals' rights and safety, and harnessing AI to improve lives." A new report on AI trends in education is being addressed as well, which will cover the risks and opportunities related to teaching, learning, research, and assessment.

Social media went through similar scrutiny during its growth stages in the 2010s. Under the microscope were addictive behavior and disorders stemming from social comparison - and later - data privacy and misinformation. The difference this time around is that AI companies are generally calling for increased regulation as they disrupt current models, compared to the once-famous motto of "move fast and break things" of Facebook founder Mark Zuckerberg. The government today also seems to be keenly aware of moving too slowly on the tech front, with U.S. Surgeon General Vivek Murthy even releasing an advisory that covers the dangers of social media on child and adolescent brain development.

SA commentary: "Hype over AI investing has quickly caused a bubble to form in AI stocks," writes SA analyst Logan Kane in Artificial Intelligence Investing Hype Needs A Reality Check. "History shows dozens of similar examples with each new technological innovation," citing lessons learned from the dot-com bubble, and similar patterns that have recently played out in cannabis stocks, sports betting and blockchain. He also compares tech innovations that lead to increased growth and corporate profits vs. trends that weigh on labor productivity and margins. (17 comments)

Pay up

Password-sharing days are over if you have a U.S. Netflix (NFLX) account. A crackdown that started in Latin America, Europe, and elsewhere has finally arrived in the streamer's home market, as it looks to combat slower growth with additional revenue streams. "A Netflix account is for use by one household," the company wrote in a blog post. "Everyone living in that household can use Netflix wherever they are - at home, on the go, on holiday - and take advantage of new features like Transfer Profile and Manage Access and Devices." The new model will allow users to buy extra memberships at a lower rate, and many may start seeing the prompts the next time they log in. (26 comments)

Saudi warning

Starting off the month at around $65 a barrel, WTI crude prices have bounced in May by nearly $10/bbl. The latest announcement from Saudi Arabia's top energy official may add to the rally after he told short sellers to "watch out." "Speculators, like in any market they are there to stay, I keep advising them that they will be ouching - they did ouch in April," Prince Abdulaziz bin Salman declared at an economic forum in Doha, referring to the surprise production cuts posted in early April. However, that rally was short-lived, and some are voicing renewed skepticism before OPEC+ meets in Vienna on June 4 to discuss production policy for the second half of 2023. (25 comments)

Just in case

As the debt ceiling continues to take attention, the market still has to contend with whether the Fed can engineer a prized soft economic landing or if a recession is on its way. Goldman Sachs is more bullish on the economy, with economists estimating just a 35% chance of recession, compared with an average of 60% from other major banks. However, if a hard landing does materialize, Goldman’s equity team has picked its favorite stocks to put cash to work. Those stocks have some combination of low valuation, a strong balance sheet and a solid dividend history. Among the picks are Microsoft (MSFT), J&J (JNJ), Coca-Cola (KO) and Hormel (HRL). See the full list here. (61 comments)

Today's Markets

In Asia, Japan -0.9%. Hong Kong -1.8%. China -1.3%. India -0.3%.
In Europe, at midday, London -1.8%. Paris -1.8%. Frankfurt -1.7%.
Futures at 6:30, Dow -0.4%. S&P -0.4%. Nasdaq -0.3%. Crude +1.6% to $74.05. Gold +0.2% to $1979.10. Bitcoin -2.3% to $26,722.
Ten-year Treasury Yield -2 bps to 3.68%

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $22B, 2-Year FRN Auction
12:10 PM Fed's Waller Speech
1:00 PM Results of $43B, 5-Year Note Auction
2:00 PM FOMC Minutes

Companies reporting earnings today »

What else is happening...

Former rivals, Uber (UBER) and Waymo (GOOGL), partner on robotaxis.

Earnings: Lowe's (LOW) management offers optimistic commentary.

Apple (AAPL) inks Broadcom (AVGO) deal for U.S.-made components.

Meta (META) sells Giphy to Shutterstock (SSTK) at a $262M loss.

DeSantis to launch presidential run during an event with Elon Musk.

'Organized retail crime is definitely a thing' - BJ's (BJearnings call.

Panera Brands names new CEO as it moves toward IPO.

Bud Light (BUD) sales continue crashing, Coors Light (TAPsales rise.

Mortgage delinquency rate bounces 13% off March lows - Black Knight.

COVID vaccine stocks light up amid fears of new infections in China

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

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