Power Plays and Electric PivotsToday's Market Sizzle: Wall Street's Scrutiny to AI's Energy Surge, and the EV Sales Rollercoaster
Hey there, Josh here from sunny Miami, FL! Hot off the press: the new retirement dream magic number is a whopping $1.46 million. But guess what? Even that might not cut it. It's like running a marathon only to be told at the finish line, "Oops, we meant a triathlon." This number speaks volumes about our retirement fears rather than investing savviness. Watchdogs Eye Wall Street's Goliaths
Big news: FDIC's eyeing BlackRock, Vanguard, and State Street, managing a huge $23 trillion. They own big bits of U.S. banks, over 10% in some. Are they just watching, or steering the ship? The FDIC might tighten rules on these giants, especially where they own a lot. This is about power in money. Their sway was seen in big decisions, like at Exxon Mobil in 2021. In D.C., the buzz is loud. Some see overreach; others, too much power in few hands. BlackRock and Vanguard say they're just watching. But with such influence, it's clear why passive investing is seen as destructive. Eyes are wide open on this. Rate Riddle: Investors Foresee Higher Long-Term Rates Than Fed
Investors think U.S. interest rates will stay high, around 3.6% by 2027, higher than the Fed's guess of 2.6%. Why? The U.S. economy's doing well, and AI's changing things. They're looking at the "terminal rate," where rates end after cuts. The Fed's own long-term rate guess went up a bit to 2.6%. Inflation and making stuff in the U.S. are still strong, making people wonder where rates will go. The Fed wants to cut rates three times this year, but inflation's still a worry. Some big brains like at Goldman Sachs think the final rate will be 3.25% to 3.5%, maybe more than the Fed thinks. Rates in the market keep changing. In December, they thought rates would go below 3.2%, but now it's up to 3.6%. It's all about balancing growing the economy and keeping prices okay. It's a tough job, mixing AI, spending, and world stuff to figure out the best rate. Powering AI: The Surging Demand for Fossil Fuels in the Digital Age
AI's energy demand might be good news for fossil fuels, especially natural gas. Leaders in the industry say AI and data centers need more electricity than renewables can give. Toby Rice of EQT compares this to the LNG boom. Fossil fuel execs argue that renewables can't power big data centers alone. Doug Kimmelman of Energy Capital Partners says gas is needed for 24/7 power. This clashes with tech firms' green promises. Data centers are using more power. Microsoft is even opening a new one every three days! By 2035, they could use lots of U.S. electricity. Globally, data center power might double by 2026. Dominion Energy, powering many data centers, relies on gas for now. Gas powers over 40% of U.S. electricity, and more gas plants are planned. But if tech companies keep their green goals, this might change. Experts from S&P and Schneider Electric think green energy will grow, possibly reducing gas use. So, the future of gas in this AI-powered world is uncertain. Electric Downturn: Tesla and BYD Face Slumping EV Sales
Tesla and BYD, leading in electric cars, just saw their sales fall. This makes people wonder how fast we're moving to electric. Both companies cut car prices to boost sales amid more competition, especially in China. BYD even started a price war. Many still doubt electric cars due to their high cost and the need for regular charging. Electric car sales aren't growing as fast, leading to discounts. Big car makers like GM and Ford are now selling more hybrids, which use a battery and an engine. Tesla's recent sales dropped 20% from before and 8% from last year. They sold less than the 450,000 cars they hoped for. BYD's electric car sales went down 42%. Even with these drops, Tesla is back on top in EV sales. Tesla blames supply issues and some attacks for its low sales. Musk warned this year might be tough. Tesla's stock value has fallen, making it a weak player in the S&P 500. Experts think Tesla's main car models might be too common now. That's today's Market Sizzle! Good trading, good life. You're currently a free subscriber to Josh Belanger. For the full experience, upgrade your subscription.
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Rabu, 03 April 2024
Power Plays and Electric Pivots
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