weekly market update 8/23/2024

"The time has come for policy to adjust."
~ Federal Reserve Chairman Jerome Powell on August 23, 2024 ~

Two years after warning markets that the Federal Reserve would “use our tools forcefully” and might cause “some pain” in its pursuit to battle the highest inflation in over 40 years, Fed Chair Jerome Powell signaled on Friday that this tightening cycle is finally nearing an end.  During his much-anticipated speech from Jackson Hole Wyoming, Mr. Powell emphasized confidence that inflation was on a sustainable path back towards 2% and highlighted rising risks around a slowing US labor market.  Despite markets already pricing in 100% odds for an interest rate cut during the Fed’s next policy announcements on September 18th, markets cheered the news and stocks and bonds strengthened.  Next week will be fairly quiet as markets head into the Labor Day holiday, but the Fed’s preferred gauge for inflation, the PCE, will be released on Friday and AI darling Nvidia reports earnings after the close on Wednesday.

AI LABOR IMPLICATIONS?

While the promise of AI is well known, we are always looking for real world implications as this technology proliferates.  Recently, research firm Bespoke released an interesting chart that shows the percentage change of jobs postings by occupation since the pandemic (see below).  A notable casualty is software developer jobs, as AI is increasingly being used to address the more tedious, but critical, tasks of updating foundational software.  Amazon has been particularly active in leveraging AI and recently CEO, Andy Jassy, disclosed that using AI to update applications has saved the company the equivalent of 4,500 developer-years of work (not a typo)!

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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