Welcome back,

More fighters are entering the AI ring, while more traders are flocking to Wall Street’s latest inflation hedge.

Let’s keep it concise.

Market Headlines 👀

• Twitter (TWTR) is looking to sublease its NYC office space as Musk attempts to curb costs.

• Blowout China PMI (Purchasing Managers’ Index) data came in at its highest in 11 years at 52.6 (est. 50.6). It marks the third biggest beat on record.

  • Post-pandemic, China’s new leadership is expected to lay out economic goals to get growth back on track, restore confidence and avoid a build-up of financial risks.

• General Motors (GM) cut jobs despite pledges to the contrary.

• Goldman Sachs (GS) raises prospect of selling parts of its failing consumer unit.

• Virgin Galactic (SPCE) confirms launch date of commercial spaceflight service.

• The US is aiming to chart a new course for the chip industry with the proposed “Chip Act,” a $53B plan.

• Paramount (PARA) said to turn down a $3B offer for Showtime.

• Uranium particles enriched to 83.7% found in Iran.

• Nvidia (NVDA) files mixed shelf offering of up to $10B.

• Eli Lilly (LLY) says it will cut the price of insulin, capping it at $35.

• TikTok is imposing time limits on teens to prevent binges.

• Saudi Aramco is nearing a deal to acquire a stake in Renault SA and Zhejiang Geely Holding Group’s planned combustion-engine venture.

• Tesla’s (TSLA) $310B surge sets a high bar for Elon Musk’s master plan.

  • Investor day is currently underway.

• Waymo cuts jobs as parent company Alphabet (GOOGL) focuses on AI. 

• The US 30-Year Mortgage Rate rose to highest since mid-November — now at 6.85%.

• The US S&P Global Manufacturing PMI for February came in at 47.3 (exp. 47.8), a slight decrease from January’s 47.8.

• US ISM (Institute for Supply Management) Manufacturing prices rose to a 5-month high of 51.3 (est. 45.1; prev. 44.5).

• Bridgewater is exiting its Ray Dalio era with a hedge fund overhaul, betting on AI and job cuts.

• The US 10-Year Yield rose to 4% for the first time since November.

• The US 2-Year Yield hit 4.90%, its highest since June 2007.

• US MBA mortgage applications fell -5.7% last week (prev. -13.3%).

Earnings 💸

• Kohl's (KSS)

  • EPS: -$2.49 misses (exp. $0.97)

  • Revenue: $5.78B misses (exp. $6.03B)

• Lowe’s (LOW)

  • EPS: $2.28 beats (exp. $2.21)

  • Revenue: $22.44B misses (exp. $22.71B)

• Nio (NIO)

  • EPS: -¥3.07 misses (exp. -¥1.60)

  • Revenue: ¥16.06B misses (exp. ¥17.78B)

• Dollar Tree (DLTR)

  • EPS: $2.04 beats (exp. $2.02)

  • Revenue: $7.72B beats (exp. $7.61B)

• Snowflake (SNOW)

  • EPS: $0.14c beats (exp. $0.049c)

  • Revenue: $$589M beats (exp. $575.9M)

• Salesforce (CRM)

  • EPS: $1.68 beats (exp. $1.36)

  • Revenue: $8.38B beats (exp. $8B)

• Okta (OKTA)

  • EPS: $0.30c beats (exp. $0.09c)

  • Revenue: $510M beats (exp. $489.8M)

• Splunk (SPLK)

  • EPS: $2.04 beats (exp. $1.15)

  • Revenue: $1.25B beats (exp. $1.08B)

• Veeva (VEEV)

  • EPS: $1.15 beats (exp. $1.048)

  • Revenue: $563.389M beats (exp. $552.84M)

Recap Around the Street 🧠

The race to make the leading AI product is so fierce that even Elon Musk wants in on the action. You’ve probably heard of ChatGPT by now, if not from your high school relative boasting about scheming their homework, then at least from John Oliver’s latest coverage over last weekend.

To recap the hype: In five days after its November launch, OpenAI’s chatbot, ChatGPT, drew in 1M users. That made it one of the fastest consumer-product launches in history. Microsoft just invested $10B in OpenAI to expand ChatGPT’s capabilities, while search giants Google and Baidu (China) built their own answers in attempts to keep up.

Not to be outdone, in recent weeks, both Mark Zuckerberg (META) and Elon Musk (TWTR) announced plans to join the fight. On February 24th, Meta released a model called llama. This week, it was reported that Musk wants to create an AI that would be less “woke” than ChatGPT.

Across the pond, a British tech entrepreneur shared smaller players including Ask Seneca (which answers questions based on the writings of the stoic philosopher), Pickaxe (which analyzes your own documents), and Isaac Editor (which helps students write academic papers).

Despite more fighters entering the ring, experts hint that the potential winner in generative AI will come from less “chatty” services enabled by foundation models.

Supreme Court justices questioned President Biden's plan to forgive billions of dollars of student debt yesterday. Biden's student loan forgiveness plan is estimated to cost $430B over three decades. Conservative justices, who comprise a majority of the court, examined whether the Biden administration has the authority to cancel federal student loans as a result of the COVID-19 emergency.

The concept of student debt cancellation has divided the country. Some say it would benefit borrowers at a time of high inflation, or lead to financial stability and economic security. Others have flagged it as another contributor to higher prices, or an unfair measure for those that chose not to go to college because of the cost. The Fed estimated that Americans owed $1.76T in student loans in the fourth quarter of 2022, with the average student loan debt around $40,000 per borrower.

As a result of the ongoing debate, SoFi (SOFI), a known player for refinancing student loans, rose as much as 4% in afternoon trading on Tuesday.

Commodity futures are the hot commodity on the street, as they’re the latest “inflation hedge” for investors. As inflation tensions linger across the US, Eurozone and APAC, wealth preservation has become as important as maximizing returns. With benchmarks like the S&P 500 recording losses as of recent, they’re no longer the comfortable bet they may have previously been.

Commodity futures are negatively correlated with bonds and lowly correlated with equities. Statistically, according to economists, they can be a hedge against inflation itself. That’s because commodities are physical goods that are often used in the production of other goods and services. When the prices of goods and services increase due to inflation, the prices of commodities tend to rise as well.

Investors can purchase commodity futures contracts that specify a future delivery date and price for a particular commodity. If inflation causes the price of the commodity to increase before the delivery date, the investor can sell the futures contract at a profit. This profit can then be used to offset the increased cost of other goods and services due to inflation.

Apartment rents fell as a crush of new supply hit the market. Rents fell in every major metropolitan area in the U.S. over the past six months through January. It’s a trend that looks poised to continue as the biggest delivery of new apartments in nearly four decades is slated for this year.

Renters with new leases paid a median rent that was 3.5% lower than they would have paid last August, according to estimates from Apartment List. It was the first time in five years that rent fell every month over a six-month period, according to the same estimates.

Market Preview 🎞️

• Thursday: Costco (COST), Zscaler (ZS) and Broadcom (AVGO) report Q4 earnings.

• Thursday: Eurozone CPI, unemployment

• Friday: Eurozone S&P Global Services PMI, PPI

Thats all for today, folks! We’ll be back around the same time tomorrow with a curated list of important news, economic data and market highlights. 

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