The Magnificent Seven Aren’t This Market’s Only Winners
Digest
The podcast begins by discussing the US budget deficit, which has reached $1.8 trillion in the latest fiscal year. This is attributed to increased spending on interest and programs for older Americans. The podcast also mentions the upcoming presidential election and the proposed tax and spending plans of both candidates, which are expected to further increase the deficit. The podcast then shifts to Pfizer's declining stock performance over the past two years and the involvement of activist investor Starboard Value, which has taken a $1 billion stake in the company. Starboard is demanding changes to improve Pfizer's performance, and the podcast explores the potential implications of this involvement. The podcast focuses on the upcoming earnings season and the potential for a shift in market performance. While tech giants have been driving the S&P 500's growth in the first half of 2024, other sectors like utilities, materials, and industrials have gained momentum in the third quarter. The podcast discusses the possibility of a narrowing earnings gap between the "magnificent seven" tech giants and the rest of the S&P 500. The podcast reports on a slowdown in orders for factory robots in North America, attributed to a decline in manufacturing activity and an increase in human workers. However, the podcast emphasizes that this is a temporary slowdown and that demand for robots will likely rebound as manufacturing activity picks up. The podcast concludes with the announcement of the Nobel Prize in Physics, awarded to John Hopfield and Jeffrey Hinton for their contributions to artificial intelligence. Their work on artificial neural networks has paved the way for powerful AI models like ChatGPT.
Outlines
US Budget Deficit and Market Outlook
The podcast discusses the US budget deficit, which has reached $1.8 trillion in the latest fiscal year, and the potential impact of the upcoming presidential election on the economy. It also explores the possibility of a shift in market performance as other sectors gain momentum.
Pfizer's Stock Performance and Activist Investor Involvement
The podcast examines Pfizer's declining stock performance and the involvement of activist investor Starboard Value, which is demanding changes to improve the company's performance.
Slowdown in Robot Hiring and AI Advancements
The podcast reports on a slowdown in orders for factory robots in North America, attributed to a decline in manufacturing activity. It also discusses the Nobel Prize in Physics awarded to John Hopfield and Jeffrey Hinton for their contributions to artificial intelligence.
Keywords
US Budget Deficit
The difference between the amount of money the US government spends and the amount it collects in taxes. A persistent deficit can lead to increased national debt and potential economic instability.
Activist Investor
An investor who seeks to influence the management and operations of a company to improve its financial performance. They may use various tactics, such as shareholder proposals, proxy fights, or public pressure.
Earnings Season
A period when publicly traded companies release their financial results for a specific quarter. Investors closely monitor earnings reports to assess company performance and make investment decisions.
Market Broadening
A shift in market performance where a wider range of sectors and companies contribute to overall growth, rather than just a few dominant players.
Artificial Neural Network
A type of machine learning algorithm inspired by the structure and function of the human brain. It consists of interconnected nodes that process information and learn from data.
Pfizer
A multinational pharmaceutical corporation that develops and manufactures medicines and vaccines.
Starboard Value
An activist investment firm that seeks to improve the performance of companies in which it invests.
Robot Hiring
The use of robots in manufacturing and other industries to automate tasks and improve efficiency.
Nobel Prize in Physics
An annual award given to individuals who have made significant contributions to the field of physics.
Q&A
What are the main factors contributing to the US budget deficit?
The US budget deficit is driven by increased spending on interest payments and programs for older Americans, such as Social Security and Medicare.
What is Starboard Value's goal in taking a stake in Pfizer?
Starboard Value is demanding changes at Pfizer to improve its performance, which has been declining in recent years. They are seeking to influence the company's management and strategy.
What are the key factors to watch for during the upcoming earnings season?
Investors will be closely monitoring the earnings growth of both the "magnificent seven" tech giants and the rest of the S&P 500, as well as the impact of rate cuts on corporate earnings.
How has the slowdown in robot hiring impacted the manufacturing industry?
The slowdown in robot orders is a result of declining manufacturing activity and an increase in human workers. However, this is expected to be a temporary trend, and demand for robots is likely to rebound as manufacturing activity picks up.
What are the key contributions of John Hopfield and Jeffrey Hinton to the field of artificial intelligence?
Hopfield and Hinton's work on artificial neural networks has revolutionized AI, enabling the development of powerful models that can recognize patterns in large data sets. Their research has paved the way for systems like ChatGPT.
Show Notes
P.M. Edition for Oct. 8. WSJ markets reporter Hardika Singh discusses whether the third quarter earnings reports can show there’s more to the S&P 500 than just the Magnificent Seven. And WSJ’s Jared Hopkins explains what’s next for Pfizer after an activist investor revealed a $1 billion stake. Plus, the U.S. deficit tops $1.8 trillion in 2024. Tracie Hunte hosts.
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