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Chip Giant Intel Releases Latest AI Chip, Performance Far Surpasses Nvidia H100

Intel(INTC), the chip giant, has unveiled its latest artificial intelligence (AI) chip, Gaudi 3, on April 9th, with expectations of widespread availability in the third quarter.

During the Intel Vision 2024 conference held on the same day, Intel claimed that the new Gaudi 3 chip offers an average 50% improvement in inference capabilities and a 40% improvement in efficiency compared to Nvidia(NVDA)’s H100 chip. Additionally, the speed of running AI models with Gaudi 3 is 1.5 times that of H100. Intel stated that this product will be roughly equivalent to Nvidia’s latest H200 chip, and in some areas, it may even outperform it.

Intel tested the chip on models such as Llama, which is open source, and Falcon, supported by Abu Dhabi. The company stated that the new Gaudi 3 can assist in training or deploying models, including stable diffusion or OpenAI’s Whisper model for speech recognition. Intel claimed that its chips have lower power consumption compared to Nvidia’s.

The new Gaudi 3 chip from Intel is set to be widely available to customers in the third quarter, with companies including Dell, HP, and Supermicro planning to utilize the chip. However, Intel did not provide a price range for Gaudi 3.

Das Kamhout, Vice President of Intel’s Xeon Software, stated, “We do expect it to be highly competitive with Nvidia’s latest chips, from our competitive pricing to our unique open integrated chip network where we use industry-standard Ethernet.” “We believe this is a strong product.”

Sachin Katti, Senior Vice President of Intel’s Network Group, mentioned during a conference call, “We are working with the software ecosystem to build open reference software and building blocks that allow you to stitch together the solution you need rather than being forced to buy a solution.”

According to Intel, the Gaudi 3 chip is manufactured using 5-nanometer process technology, indicating that the company is utilizing external foundries for chip production. In addition to designing Gaudi 3, Intel also plans to produce AI chips at a new factory in Ohio, expected to commence operations in 2027 or 2028.

However, challenging Nvidia is no easy task. According to statistics, Nvidia currently holds an 80% share of the AI chip market, making it a dominant player. Over the past year, the company’s GPUs have been the preferred high-end chips for AI manufacturers.

In addition to the Gaudi 3 accelerator, Intel(INTC) has also released another hardware: the sixth-generation Xeon processor. It provides high-performance solutions for running current generation AI solutions, including RAG. It is set to be launched in the second quarter of this year.

Compared to the second-generation Intel Xeon processors, the sixth-generation Xeon processor, codenamed Sierra Forest, offers a four-fold increase in performance per watt and a 2.7-fold increase in rack density.

The sixth-generation Xeon processor, codenamed Granite Rapids, incorporates software support for the MXFP4 data format. Compared to the fourth-generation Xeon processor using FP16, its next token latency can be reduced by up to 6.5 times, and it can run the Llama-2 model with 70 billion parameters.

As of the close of April 9th, Intel’s stock was at $38.33, up 0.92%, with a market capitalization of $163.17 billion. In response to this news, Nvidia continued to decline by over 2%. Perhaps it’s time to sell Nvidia(NVDA) stocks.

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Tech Stocks

Microsoft Announces Expansion Plans in Japan, Including the Establishment of Microsoft Asia Research Institute

On April 9th, Microsoft(MSFT) unveiled its ambitious expansion strategy in Japan, announcing the opening of its first Microsoft Asia Research Institute in the country. The tech giant also revealed plans to bolster digital skills training initiatives as part of its investment in Japan, aiming to provide AI skills training to over 3 million individuals over the next three years. Additionally, Microsoft pledged a $10 million contribution to support Tokyo University over the next five years.

The decision to establish the Microsoft(MSFT) Asia Research Institute in Japan underscores the company’s commitment to advancing technological innovation and research in the region. By leveraging Japan’s highly skilled talent pool and vibrant tech ecosystem, Microsoft aims to drive breakthroughs in areas such as artificial intelligence, cloud computing, and data science. The institute will serve as a hub for collaboration between Microsoft researchers, academics, and industry partners, fostering the exchange of ideas and driving innovation.

Microsoft’s initiative to expand digital skills training programs in Japan reflects its dedication to empowering individuals with the tools and knowledge needed to thrive in the digital economy. By offering AI skills training to millions of people, Microsoft seeks to bridge the digital divide and equip individuals with the capabilities to succeed in an increasingly technology-driven world. This investment in human capital not only benefits individuals but also contributes to Japan’s economic development and competitiveness on the global stage.

Furthermore, Microsoft’s commitment to supporting Tokyo University with a $10 million grant highlights the company’s emphasis on academic collaboration and research excellence. The funding will enable Tokyo University to pursue cutting-edge research initiatives and cultivate the next generation of tech leaders and innovators. This partnership underscores Microsoft’s belief in the power of education and research to drive positive change and address societal challenges.

In response to these announcements, Microsoft’s stock price may experience positive momentum, reflecting investor confidence in the company’s growth prospects and strategic initiatives. The expansion plans in Japan signal Microsoft’s commitment to fostering innovation, driving economic growth, and creating value for shareholders.

As Microsoft(MSFT) continues to execute its expansion strategy and invest in key initiatives, stakeholders will closely monitor the company’s performance and its impact on financial results. The developments in Japan reaffirm Microsoft’s position as a leading global technology company and underscore its commitment to driving innovation and societal progress.

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Tech Stocks

OLED Panel Shipments Exceed Expectations, OLED Industry Stocks Benefit

According to the latest report released by Display Supply Chain Consultants (DSCC), the OLED panel production value in 2023 saw a year-on-year decrease of 4%, which was lower than the previous expectation of 9%. Moreover, there was a noticeable recovery trend in the latter half of last year. The report indicates that in the second half of 2023, many niche markets experienced a resurgence due to the continued improvement in excess inventory and the arrival of the back-to-school and holiday sales peak season, driving a 9% increase in OLED panel shipments. David Naranjo, Senior Director at DSCC, pointed out that with Apple’s entry into the OLED tablet market, OLED tablet shipments are expected to achieve triple-digit year-on-year growth in 2024.

This news has implications for several stocks in the display supply chain, particularly those involved in OLED technology and production. Companies like Samsung Display, LG Display, Universal Display Corporation (OLED), and BOE Technology Group Co., Ltd., which are major players in the OLED panel manufacturing sector, could experience shifts in their performance and stock prices.

Given the positive outlook for OLED panel shipments in the coming years, companies heavily invested in OLED technology, such as UDC, could see a boost in their financial performance. UDC, as a leading supplier of materials for OLED production, stands to benefit from increased demand for OLED panels. This could translate into higher revenues and potentially drive up the stock price.

Similarly, Samsung Display and LG Display, as major OLED panel manufacturers, may experience improved financial performance as the demand for OLED panels grows. Both companies have significant expertise and infrastructure in OLED production, positioning them well to capitalize on the anticipated increase in shipments. Consequently, investors may view these stocks more favorably, leading to potential gains in stock prices.

BOE Technology Group Co., Ltd., a Chinese display manufacturer, could also benefit from the growing demand for OLED panels. As the industry expands and more companies adopt OLED technology, BOE’s OLED panel production capabilities could become increasingly valuable. This could positively impact the company’s financial results and drive its stock price higher.

Overall, the outlook for OLED panel manufacturers and related companies appears optimistic, fueled by expectations of continued growth in demand for OLED panels. As a result, investors may consider these stocks attractive investment opportunities, anticipating potential gains in both financial performance and stock prices.

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EHang Surges Amid China’s Emphasis on Low-Altitude Economy Development

EHang Intelligent Technology(EH)’s stock rose by 4.86% at today’s close, fueled by China’s recent emphasis on the development of the low-altitude economy. On April 7th, the Civil Aviation Administration of China’s Central and Southern Region issued the world’s first production license for an unmanned aerial vehicle capable of carrying passengers to Guangzhou EHang Intelligent Technology Holdings Limited.

According to China’s “Opinions on Deepening the Reform of Low-Altitude Airspace Management,” the “low-altitude” refers to the airspace with a vertical distance of less than 1000 meters from the ground, which can extend to 4000 meters depending on regional characteristics and actual needs. The “low-altitude economy” relies on the low-altitude airspace and is centered around the general aviation industry, involving various sectors such as low-altitude flight, aviation tourism, feeder transportation, general aviation services, and research and education. The Guangdong-Hong Kong-Macao Greater Bay Area Digital Economy Research Institute (IDEA) recently released a white paper on the low-altitude economy, indicating that by 2025, the comprehensive contribution of the low-altitude economy to China’s national economy could reach 3 trillion to 5 trillion yuan.

In recent years, China’s decision-makers have intensified their efforts to develop the low-altitude economy. In February 2021, the low-altitude economy was incorporated into the “National Comprehensive Three-Dimensional Transportation Network Plan Outline.” Both the Central Economic Work Conference last year and this year’s Government Work Report viewed the low-altitude economy as a new engine for growth and a strategic emerging industry. On March 27th, the Ministry of Industry and Information Technology and four other departments jointly issued the “Implementation Plan for Innovation and Application of General Aviation Equipment (2024-2030).”

The low-altitude economy is becoming a “new track.” Taking unmanned aerial vehicles as an example, China’s civil unmanned aerial vehicle industry exceeded 120 billion yuan in scale in 2023, ranking first globally. New energy aircraft have become an important leverage for China to surpass in the field of the low-altitude economy, and the market expects to replicate the success achieved in the new energy vehicle sector.

To replicate the success of new energy vehicles, the core essence can be summarized in one sentence: the best support is respect for the market and respect for enterprises. China’s new energy vehicle industry has emerged through full market competition. Major new and old forces in the automotive industry have optimized and integrated dispersed knowledge in the market through full market competition, thus establishing China’s competitiveness in this industry.

In fact, this is a general paradigm of China’s manufacturing/creation of comparative advantages. For example, the earliest white and black home appliance industries have produced giants such as Midea, Haier, and Gree through openness and full market competition; similarly, in the field of electronic communications, Huawei, Xiaomi, OPPO, and vivo have emerged through the order of full market competition.

This is because an open system based on full market competition allows Chinese entrepreneurs to allocate and integrate dispersed knowledge more widely in the market, and the completely open market greatly reduces the distortion of resource prices caused by non-market barriers, reducing the resource allocation cost of the market. At the same time, the government, based on the principle of “letting the market decide,” fully respects the autonomy and choice of enterprises.

Therefore, whether it is the success of China’s economic reforms since the reform and opening up or the global competitiveness accumulated recently in areas such as new energy vehicles, it is evident from vivid facts that the best support from the government is respect for the market and respect for enterprises, creating a diverse market competition order and doing well in public services based on the awareness of preventing public externalities. Obviously, this is the most basic and core guarantee for promoting the healthy development of new energy aircraft and the low-altitude economy in China.

Of course, nurturing the low-altitude economy as a new growth point for China’s economy in the future also requires a series of policy reforms and support.

Starting from January 1, 2024, the “Interim Regulations on the Management of Unmanned Aerial Vehicle Flights” will be implemented, providing strong support for the low-altitude economy.

Moreover, the Civil Aviation Administration of China recently announced that it will improve the policy regulations and standard management system for general airports and support localities in accelerating the construction of general airports and temporary takeoff and landing points, guiding and supporting transportation airports to carry out general aviation business, and deepening and expanding the development of aviation medical rescue, unmanned aerial vehicle logistics, emergency rescue, emerging consumption, and other formats. Support the establishment of several low-altitude economic development demonstration zones based on civil unmanned aerial vehicle test areas (bases).

It is also important to note that the development of the low-altitude economy carries the important mission of orderly developing urban low-altitude resources, gradually shifting human and material flows from the ground to the ground-air three-dimensional layout. This means that safety is a necessary prerequisite for promoting commercialization because once serious safety accidents occur, they will cast a shadow over the nascent low-altitude economy.

In conclusion, nurturing the low-altitude economy, the best support is respect for the market and respect for enterprises. Only by revering can we focus on better leveraging the role of the government, enabling the market to play a decisive role in resource allocation, and only by respecting the autonomy and choices of enterprises can we fully stimulate entrepreneurial spirit in the low-altitude economy.

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Blackstone Group’s Acquisition Proposal Drives Apartment Income REIT Stock Up Over 23%

Apartment Income REIT saw its stock surge by more than 23% in pre-market trading after the announcement that Blackstone Group plans to acquire AIR Communities at $39.12 per share in cash. AIR Communities(AIRC) stands as one of the largest apartment owners and operators in the United States.

Founded in 1994, AIR Communities has established itself as a key player in the residential real estate sector, managing a diverse portfolio of properties across the nation. The company’s performance has been robust, with consistent revenue growth and strategic expansion initiatives contributing to its success. In recent years, AIR Communities has capitalized on the increasing demand for rental housing, particularly in urban areas, by investing in prime locations and enhancing property amenities to attract tenants.

Looking ahead, the outlook for the residential real estate market remains favorable, driven by factors such as demographic trends, urbanization, and evolving lifestyle preferences. As the population continues to grow and urban areas attract more residents, the demand for rental apartments is expected to remain strong, providing companies like AIR Communities (AIRC)with opportunities for continued growth and expansion.

The proposed acquisition by Blackstone Group further underscores the attractiveness of AIR Communities’ assets and operations. Blackstone’s interest in acquiring the company reflects confidence in the long-term value and potential of the residential real estate market. The deal is expected to provide AIR Communities with access to additional resources and expertise, enabling it to accelerate its growth strategy and enhance shareholder value.

Overall, the news of Blackstone Group’s acquisition proposal has generated significant investor interest and boosted confidence in AIR Communities’ future prospects. With a strong performance record and favorable industry dynamics, AIR Communities is well-positioned to capitalize on emerging opportunities and drive further value for its stakeholders in the evolving residential real estate landscape.

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Tech Stocks

TSMC Will Construct Its Third Semiconductor Fab In Arizona, Receiving $6.6 billion Subsidy

The recent announcement by the U.S. Department of Commerce regarding TSMC’s agreement to construct its third semiconductor fab in Arizona as part of a $65 billion investment plan has sent shockwaves through the semiconductor industry. This move, aimed at bolstering U.S. chip manufacturing capabilities, is expected to have significant implications for various companies within the sector.

TSMC’s decision to establish a cutting-edge facility in Arizona underscores the increasing importance of domestic semiconductor production amid global supply chain disruptions and geopolitical tensions. With a commitment to begin producing 2-nanometer chips in the U.S. by 2028, TSMC is poised to strengthen its foothold in the American market and address growing demands for advanced semiconductor technology.

As TSMC solidifies its presence in the U.S., several key players in the semiconductor industry are likely to feel the impact of this strategic expansion. Here are some companies that could be affected:

  1. Intel Corporation (INTC): As one of the leading American semiconductor companies, Intel may face heightened competition from TSMC’s enhanced presence in the U.S. market. The move could intensify pressure on Intel to innovate and maintain its technological edge.
  2. Applied Materials, Inc. (AMAT): A major supplier of semiconductor manufacturing equipment, Applied Materials stands to benefit from increased investment in semiconductor fabrication facilities. The expansion of TSMC’s operations in Arizona could lead to greater demand for equipment and technology from suppliers like Applied Materials.
  3. NVIDIA Corporation (NVDA): As a major customer of TSMC, NVIDIA could benefit from improved access to advanced semiconductor manufacturing capabilities in the U.S. The expansion could support NVIDIA’s efforts to develop and produce high-performance chips for its graphics cards and data center products.
  4. Advanced Micro Devices, Inc. (AMD): Another significant client of TSMC, AMD may experience positive effects from the increased availability of domestically manufactured chips. The expansion could enhance AMD’s competitiveness in the market and support its growth trajectory.
  5. Qualcomm Incorporated (QCOM): Given its reliance on TSMC for chip production, Qualcomm could benefit from the expanded capacity and capabilities of TSMC’s Arizona fab. The move may strengthen Qualcomm’s position in the U.S. semiconductor market and facilitate its efforts to develop advanced mobile and wireless technologies.

In summary, TSMC’s decision to build a third semiconductor fab in Arizona as part of its multi-billion-dollar investment plan is expected to have far-reaching implications for various companies within the semiconductor industry. While it signals a significant step towards bolstering domestic chip manufacturing capabilities, it also underscores the evolving dynamics of global semiconductor supply chains and competition in the tech industry. As stakeholders assess the potential ramifications of this development, attention will undoubtedly be focused on how it reshapes the competitive landscape and influences future trends in the semiconductor market.

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The US Stock Earnings Season Kicks off This Week

The first-quarter earnings season is set to gradually commence in the US stock market this week, with JPMorgan Chase(JPM), Wells Fargo(WFC), and Citigroup(C) leading the way on Friday. Following suit will be global asset management giant BlackRock(BLK), and Delta Air Lines(DAL).

Despite the impressive performance of US stocks in the first quarter, Wall Street anticipates a relatively lackluster earnings season for American companies. However, analysts expect the “Big Seven” to continue driving profit growth in the US stock market, particularly in the telecommunications and technology sectors. Moreover, with US companies currently boasting record-high levels of cash flow, many firms may announce substantial buybacks and business expansions.

While the S&P 500 index surged by 10.16% in the first three months of the year, Wall Street strategists hold a somewhat pessimistic view regarding the performance of US companies in the first quarter. Expected profit growth for S&P 500 index component companies is forecasted to be the lowest since 2019, standing at just 3.9% year-on-year.

However, this situation could potentially be interpreted as a positive sign. If US companies outperform expectations, it could boost market confidence and fuel further growth. A similar scenario occurred three months ago when companies surpassed fourth-quarter earnings expectations, leading to market gains.

Wendy Soong, a senior analyst at Business Insider, noted, “Traders expect the Federal Reserve to cut interest rates later this year, which could result in stronger consumer spending, economic activity, better profit growth, and higher stock prices.”

Wall Street has outlined five major investment themes to watch during this earnings season:

  1. Continued profit growth led by the “Big Seven” companies, with significant increases anticipated for firms like Apple(AAPL), Microsoft(MSFT), Alphabet(GOOG), Amazon(AMZN), Nvidia(NVDA), Meta(META), and Tesla(TSLA) in the first quarter.
  2. Expected profit growth in the communication services, technology, and utilities sectors, while some sectors like energy, materials, and healthcare may experience profit declines.
  3. Record-high levels of corporate cash flow and free cash flow, potentially leading to increased capital allocation through dividend payments and investments.
  4. Improved operating profit margins, indicating enhanced corporate profitability.
  5. Potential disparity between stock price trends and earnings performance, as indicated by a low correlation index for S&P 500 index component stocks.

In summary, while Wall Street holds a somewhat negative outlook for the upcoming earnings season, potential positive surprises in corporate performance could spur market growth and bolster investor confidence.

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Top Stocks

Southwest Airlines Boeing 737 Incident Impact 2 Stocks

On April 7th, a Southwest Airlines(LUV) Boeing(BA) 737-800 aircraft flying from Denver, Colorado to Houston, Texas experienced an engine cowling detachment during takeoff. This incident has prompted scrutiny and analysis of its potential effects on both Boeing Company and Southwest Airlines stock prices.

For Boeing(BA), this occurrence adds to a string of challenges the company has faced in recent years, notably including the grounding of its 737 MAX fleet following two fatal crashes. While investigations into the specific cause of the engine cowling detachment are ongoing, any negative publicity regarding aircraft safety could further erode investor confidence in Boeing. Consequently, there may be downward pressure on Boeing’s stock price as investors assess the implications of this incident on the company’s reputation and future prospects.

Similarly, Southwest Airlines(LUV), as the operator of the affected aircraft, may see its stock price affected by this incident. Despite Southwest’s strong safety record and reputation for customer service, any association with aircraft safety concerns could lead to investor apprehension. Thus, Southwest Airlines’ stock price may experience downward pressure as investors evaluate the potential impact of the incident on the airline’s operations and passenger confidence.

However, the ultimate impact on both Boeing and Southwest Airlines’ stock prices will depend on various factors, including the outcome of the investigation, regulatory responses, and the companies’ efforts to address safety concerns. Both Boeing and Southwest Airlines are likely to prioritize safety and stakeholder reassurance as they navigate through this incident.

In summary, the engine cowling detachment incident involving a Southwest Airlines Boeing 737-800 aircraft has raised questions about aircraft safety and could potentially impact the stock prices of both Boeing Company and Southwest Airlines. Investors will closely monitor developments and responses from both companies as they assess the implications for their investments in the aerospace and aviation sectors.

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Tech Stocks

Is The Best Time To Buy Apple(AAPL) Stock?

Amidst a flurry of recent developments, Apple Inc. (AAPL) finds itself in the spotlight yet again, with news ranging from leak scandals to anticipation over forthcoming product launches. These events have stirred considerable interest among investors, prompting varied reactions in the stock market.

Firstly, Apple’s recent legal proceedings against former employee Andrew Aude have brought to light a significant leak scandal. Court documents from the Superior Court of Santa Clara County, California, unveiled allegations of Aude’s breach of confidentiality agreements and labor laws. Revelations about unreleased products such as the Vision Pro mixed reality headset have sent ripples across the tech community and raised concerns about Apple’s ability to safeguard sensitive information.

Despite the turbulence caused by the leak scandal, Apple(AAPL) continues to make waves with its innovative endeavors. Rumors abound regarding the company’s foray into household robotics, signaling its ongoing commitment to exploring new frontiers. However, such ventures have met with mixed reactions from investors, reflecting uncertainty about the potential impact on Apple’s core business.

In light of recent developments, Wall Street analysts have offered diverse perspectives on Apple’s stock performance. While some remain cautious, citing concerns over the leak scandal and the company’s diversification efforts, others see potential opportunities for investment. Renowned strategist Dan Ives from Wedbush suggests that Apple’s stock price may have room to dip further, presenting a buying opportunity for investors looking to capitalize on potential future gains.

Indeed, the current downturn in Apple’s stock price may offer an attractive entry point for those with a long-term investment horizon. As the company navigates through the aftermath of the leak scandal and prepares to unveil new products, there is potential for stock price appreciation in the medium to long term. However, investors should exercise caution and conduct thorough research before making any investment decisions.

In conclusion, Apple’s recent headline-grabbing events have sparked both concern and excitement among investors. While challenges lie ahead, the company’s track record of innovation and resilience suggests that it may weather the storm and emerge stronger than before. For those willing to seize the opportunity, the current downturn in Apple’s stock price may present a favorable buying opportunity, setting the stage for potential future gains. When is the best time to buy apple(AAPL) stock?

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Wall Street’s Expectations for Fed Rate Cuts Diminish to Zero

In just a few short months, Wall Street’s expectations for the number of interest rate cuts by the Federal Reserve this year have plummeted from 7 to 3, and now, that number may further decline to zero.

Towards the end of last year, despite the Fed’s projection of only three rate cuts for the year due to rapidly declining US inflation, Wall Street speculated on a more aggressive normalization of rates. It anticipated the Fed to cut rates as early as March, bringing the federal funds rate down from the current 5.25-5.5% range to 3.5%-3.75% by year-end.

However, influenced by a series of economic indicators in recent months, the Fed’s first rate cut of the year has yet to materialize, while the market has revised its expected number of cuts from 7 to 3.

Last week, as several Fed officials adopted a hawkish stance and the US Labor Department released robust non-farm payroll data, more and more economists on Wall Street began to anticipate no rate cuts this year.

The Fed Appears Increasingly Hawkish Just this past Friday (April 5th), the US Labor Department published a robust non-farm payroll report. March saw a substantial increase in new jobs in the US, marking the largest gain since May of the previous year. Additionally, inflation data for the first two months of the year remained higher than expected.

In the face of such economic data, internal hawkish voices within the Fed seem to be growing louder. Last Thursday, Minneapolis Fed President Kashkari, often dubbed the “hawk king,” stated that with the US economy performing so well, there was no need for rate cuts:

“If our economy is running so attractively, people are working, businesses are doing well, and inflation is falling, why do anything?”

Fed Governor Bowman expressed an even more aggressive viewpoint on Friday. She suggested that if US inflation remained above the Fed’s 2% long-term target, there might be a need to further raise policy rates this year instead of cutting them:

“Although this is not my baseline expectation, I still believe that if inflation stalls or reverses in the future meetings, we may need to further increase policy rates.”

More Economists Align with “No Rate Cuts This Year” In fact, not just the Fed, but an increasing number of top economists on Wall Street also realize that rate cuts from the Fed may not happen at all this year.

According to Ed Yardeni, President and Chief Investment Strategist at Yardeni Research, investors may finally be considering the possibility of no rate cuts this year. He added that recent oil price increases indicate upward inflation risks still exist.

Other top economists advocating for no rate cuts this year include Mohamed El-Erian, Chief Economic Advisor at Allianz Group, and Torsten Slok, Chief Economist at Apollo Global Management. El-Erian stated last month that due to inflation stickiness, the Fed should wait “a few years” before cutting rates.

Slok warned that the frenzy surrounding AI stocks would make it difficult for the Fed to cut rates:

“We are absolutely in an artificial intelligence bubble, and one of the side effects is that when tech stocks rise, it eases financial conditions. This makes the Fed’s job even more challenging.”

Following the release of the strong non-farm payroll report, the CME FedWatch tool indicates that the market’s probability of the Fed’s first rate cut in June has decreased from 55.2% a week ago to 50.8%. If the upcoming US CPI data on Wednesday (April 10th) again exceeds expectations, this probability may drop below 50% — in other words, the prospect of a rate cut by the Fed in June is increasingly uncertain.

US Bank analysts had previously predicted that if the Fed does not cut rates in June, the first rate cut might be postponed until next year. This is because as the 2024 presidential election approaches, rate cuts in the latter half of this year are unlikely: “If the Fed tells the market that a rate cut in June is unreasonable, then rate cuts later this year will be difficult to justify.”

Can US Stocks Still Rise? However, despite economists’ diminishing expectations of rate cuts this year, they are not overly pessimistic about US stocks. While lower rates theoretically benefit stock prices, in the long run, it’s earnings growth that ultimately drives stock price appreciation.

Currently, amidst robust US economic data, market confidence in US corporate earnings expectations is growing stronger, providing support to US stocks near record highs.

Billionaire investor and founder of Fisher Investments, Ken Fisher, stated that robust employment data fuels optimistic economic growth prospects, and the increasing prevalence of artificial intelligence enhances corporate efficiency, suggesting that even with high Fed rates, stock prices may continue to rise.

If the US stock market and economy can indeed withstand higher rates for a longer period, this would give the Fed more ammunition to cut rates significantly when the next inevitable recession hits — which in the long term, seems like good news for US stocks.