2023-09-18 11:58:00 ET
Summary
- UK's Competition and Markets Authority outlines principles to regulate AI.
- Wall Street firms say tracking for iPhone 15 Pro, Pro Max are "strong out of the gate."
- The IPO market is normalizing - Goldman Sachs.
Listen below or on the go on Apple Podcasts and Spotify
This is an abridged transcript of the podcast.
Our top story so far in today’s session:
The U.K.'s antitrust agency laid out seven new principles to regulate artificial intelligence in an effort to protect consumers and guide markets.
The Competition and Markets Authority said "recent developments in [foundation models] and their rapid adoption across several user applications (such as ChatGPT and Office 365 Copilot) highlight their potential to spur innovation and economic growth" and "[foundation models] have the potential to transform how we live and work, as well as a range of industries."
In the statement, CMA CEO Sarah Cardell said that the speed that AI is being incorporated into everyday life is "dramatic."
The seven principles include:
Accountability
Access
Diversity
Choice
Flexibility
Fair dealing
Transparency
As part of the process, the CMA said it would talk to a number of people and organizations to get their input on the matter, including Google ( GOOG ) (GOOGL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), Anthropic, and OpenAI.
In today’s trading, stocks are struggling for firm direction, with traders likely hesitant about big bets before the Fed has its say.
The S&P (SP500), Dow (DJI), and Nasdaq ( COMP.IND ) are all less than 0.1% from the unchanged mark.
On the economic front, the NAHB/Wells Fargo Housing Market Index fell to 45 in September vs. the consensus of 50. That’s down from 50 in August, as mortgage rates persist above 7%.
The five-point decline in September followed a six-point drop in August.
NAHB Chair Alicia Huey says, "The two-month decline in builder sentiment coincides with when mortgage rates jumped above 7% and significantly eroded buyer purchasing power."
Among active stocks:
Apple ( AAPL ) rose as Wall Street firms said that tracking for the iPhone 15 Pro and Pro Max are " strong out of the gate ."
Wedbush Securities analyst Dan Ives, who has an Outperform rating and a $240 price target, says that pre-orders are up between 10% and 12% year-over-year as of Sunday night and are "much stronger" than Wall Street expected.
MoffettNathanson downgraded PayPal ( PYPL ) to Market Perform from Outperform as incoming CEO Alex Chriss faces a number of headwinds, including formidable competition from Apple Pay and Block's ( SQ ) Cash App. The analyst also noted limited opportunities for further cost cuts.
UBS upgraded mortgage REITs Annaly Capital Management ( ANLY ) and AGNC Investment ( AGNC ) to Buy from Neutral as they're set to benefit from the end of the Federal Reserve's tightening cycle and its exit from the mortgage-backed securities market.
In other news of note:
Six U.S. governors sent a letter to President Biden last week urging more support for the offshore wind industry. They cited growing concerns that surging costs imperil multibillion-dollar projects planned for northeast Atlantic states.
Soaring materials costs, high interest rates, and supply chain snags have prompted project developers including Shell (SHEL), Orsted (DNNGY), Equinor (EQNR), BP (BP), and Avangrid ( AGR ) to cancel or renegotiate power contracts for the first commercial-scale U.S. wind farms.
They had expected to begin operations within the next five years.
And in the Wall Street Research Corner:
Goldman Sachs says the IPO market is normalizing , with its IPO Barometer of deal activity hitting 90, close to the baseline of 100.
Equity strategist David Kostin also "analyzed nearly 5,000 IPOs completed during the past 25 years."
He says, "Based on these data, we recommend investors focus on identifying firms capable of growing sales at a fast clip and achieving profitability in their first years as a public company."
"While most IPOs underperform, deals that outperform share two characteristics: greater than 40% annualized sales growth in their second and third years after flotation and positive net income by their 8th quarterly earnings report."
He adds that "investors should also be wary of IPOs that come to market at extremely high valuations."
For further details see:
Wall Street Lunch: The Seven AI Principles