UAW striking workers' concerns, potential of AI in healthcare, VC investing in deep technology, Google's user data used by police, reducing carbon emissions, impacts of fluctuating rates on consumption spending and equity market weakness
Law enforcement's increasing use of Google's user data for investigations raises privacy concerns and has led to proposed legislation
The S&P 500 is below its moving averages with potential weakness and downside potential in the market
Wells Fargo Investment Institute advises focusing on larger-cap US equities, commodities, and monitoring oil prices for insights into the overall market
Deep dives
Google's Location Data and Law Enforcement
Google maintains a vast repository of location information, often estimating a user's whereabouts to within several feet. Law enforcement has increasingly turned to this data for investigations, leading to thousands of requests for user data from Google. However, these requests can often result in law enforcement rummaging through data of individuals who have no connection to the crime at hand. Privacy advocates have raised concerns about this practice, and legislation has been proposed to ban police from seeking these warrants from Google.
Impact on Equity Markets
The S&P 500 is currently below its 50-day and 100-day moving averages, indicating potential weakness in equities. With rising interest rates, valuations become a limiting factor for equities. The Wells Fargo Investment Institute expects fair value for the S&P 500 to be around 4,200, suggesting more downside potential in the market. The weaker personal consumption spending and potential recessionary pressures further contribute to lower expectations for equities.
Investing Recommendations
Wells Fargo Investment Institute suggests focusing on larger-cap US equities, while cautioning against smaller caps and emerging markets. Commodities are viewed as an attractive investment, particularly as part of a diversified basket due to a potential supercycle. Energy-related commodities are expected to perform well, driven by tighter supply discipline and China's economic slowdown. Consumer discretionary sectors and real estate, including REITs, are advised to be avoided.
Outlook for Bonds and Fixed Income
As interest rates rise, the Wells Fargo Investment Institute expects bond markets to face pressure. Inflation concerns and potential recessionary headwinds may influence bonds to shift away from current levels. The Federal Reserve's reaction function, transitioning from inflation-fighting to propping up the economy, could impact rate decisions and the longer end of the yield curve. Future rate cuts may be necessary depending on the timing and severity of the recession.
Watch for Oil Prices
Oil prices have become a key indicator to monitor as they affect interest rates. The relationship between oil prices and inflation expectations can impact the Federal Reserve's decisions. Oil prices also have broader implications for the economy, affecting consumption, home sales, and various sectors. Observing oil price movements can provide insights into the overall market and the potential impact on inflation and interest rates.
Bloomberg News Real Economy Team Reporter Mark Niquette discusses his conversations with UAW’s striking workers from the picket line. Elisabeth Staudinger, Managing Board Member for Siemens Healthineers, talks about the potential for AI to reshape the healthcare industry. Michael Marks, Founding Managing Partner at Celesta Capital, discusses VC investing in the deep technology space. Bloomberg Businessweek Editor Joel Weber and Bloomberg News Technology Reporters Julia Love and Davey Alba share the details of the Businessweek Magazine cover story Google’s User Data Has Become a Favorite Shortcut of Police. And we Drive to the Close with Samana, Senior Global Market Strategist at Wells Fargo Investment Institute. Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.
