TRG Fast Facts

By TRG Advisors on May 17, 2024

Weekly data-driven insights on the markets and economy

1. Bull Markets

On Thursday, the Dow Jones jumped above 40,000 for the first time as the bull market climbed on bets that inflationary pressures would ease and interest rates could come down. The S&P 500 rose 0.1% to a new record after closing above the 5,300 level for the first time ever on Wednesday. The Nasdaq Composite also gained 0.1% to an all-time high. The Dow has climbed more than 6% for 2024, while the Nasdaq and S&P 500 are up 11% each.[i]

2. Onward and Upward

U.S. Treasury yields inched higher as investors contemplated recent economic data and its impact on the Fed’s monetary policy. The yield on the 10-year Treasury increased by 2 bps to 4.37%, and the 2-year Treasury yield was last at 4.79% after rising by more than 5 bps.[ii]

3. Welcome News

The April consumer price index (CPI) report indicated a slight easing of inflation, providing some relief for consumers. April’s CPI increased 0.3% from March, slightly below estimates, and increased 3.4% y/y, matching expectations. Core CPI, excluding volatile food and energy, came in at 3.6% y/y, the lowest reading since April 2021. Markets reacted positively to this news, and investors raised the implied probability that the Federal Reserve would start cutting interest rates in September.[iii]

4. Competition Is on

Google on Tuesday announced new additions to its AI model series, Gemini 1.5 Flash and Gemini 1.5 Pro, at its annual developer conference. This comes just a day after OpenAI announced its newest AI model, GPT-4o. The company said its new model, called GPT-4o, is twice as fast as GPT-4 Turbo and half the cost. Google says Gemini 1.5 Pro will soon be able to handle an hour of video content, or codebases with more than 30,000 lines. OpenAI’s upgrade allows ChatGPT to handle 50 different languages. With 35 languages, Google says Gemini 1.5 Pro has a 2 million token window, which measures context and indicates how much information the model can process at once.[iv]

5. Tariff Trip

On Tuesday, President Joe Biden unveiled steep tariff increases on an array of Chinese imports including electric vehicle (EV) batteries, computer chips and medical products. Biden will keep tariffs put in place by his Republican predecessor Donald Trump while increasing others, including a quadrupling of EV duties to over 100% and doubling the duties on semiconductor tariffs to 50%. The new measures affect $18 billion in imported Chinese goods.[v]

6. Closing the Gates

Melinda Gates announced on Monday that she is leaving the Gates Foundation she co-founded with former spouse Bill Gates more than 20 years ago and will get $12.5 billion for her own work to uplift women and families. Since its inception, the foundation has spent more than $75 billion since its inception to bring a business approach to combating poverty and disease. From 1994 through 2018, Bill and Melinda gifted about $59.5 billion to the Seattle-based foundation.[vi]

7. Meme Stock Comeback

GameStop and AMC shares slumped on Wednesday, after a two-day rally sparked by the return of “Roaring Kitty” Keith Gill, who was the central figure in the 2021 meme stock frenzy. Cinema chain AMC fell 16% after surging 135% in the past two sessions, while video game retailer GameStop tumbled nearly 20%, giving up nearly half of its gains from the same period. Trading was halted multiple times during the session, with investors exchanging more than $3.4 billion worth of GameStop shares. Keith Gill’s first online post in three years set off a rally in the highly shorted stocks and reminded investors of the 2021 retail trading frenzy.[vii]

8. Autopilot

Federal auto-safety regulators are looking into Waymo, the self-driving car startup, following 22 reported incidents involving the unit’s automated-driving system. 17 of the incidents were crashes or fires involving vehicles equipped with Waymo’s fifth-generation automated-driving system. In other incidents, the vehicles exhibited behavior that potentially broke traffic-safety laws. No injuries or fatalities were reported. This comes on the heels of an investigation into the adequacy of Tesla’s prior recall of 2 vehicles equipped with Autopilot.[viii]

[i] Kailai Han, Lisa and Tanaya Macheel, “Dow rises above 40,000 for the first time as bull market gains steam: Live updates,” CNBC, May 16, 2024, https://www.cnbc.com/2024/05/15/stock-market-today-live-updates.html. Accessed May 16, 2024.

[ii] Kailai Han, Lisa and Sophie Kinderlin, “Treasury yields move higher as investors digest inflation data,” CNBC, May 16, 2024, https://www.cnbc.com/2024/05/16/us-treasurys-investors-digest-inflation-data-.html. Accessed May 16, 2024.

[iii] Cox, Jeff, “CPI report shows inflation easing in April, with consumer prices still rising 3.4% from a year ago,” CNBC, May 15, 2024, https://www.cnbc.com/2024/05/15/cpi-inflation-april-2024-consumer-prices-rose-0point3percent-in-april.html. Accessed May 15, 2024.

[iv] Elias, Jennifer, “Google rolls out its most powerful AI models as competition from OpenAI heats up,” CNBC, May 14, 2024, https://www.cnbc.com/2024/05/14/google-announces-lightweight-ai-model-gemini-flash-1point5-at-google-i/o.html. Accessed May 15, 2024.

[v] Hunnicutt, Trevor and Steve Holland, “Biden sharply hikes US tariffs on an array of Chinese imports,” Reuters, May 14, 2024, https://www.reuters.com/markets/us/biden-sharply-hikes-us-tariffs-billions-chinese-chips-cars-2024-05-14/. Accessed May 15, 2024.

[vi] Malik, Yuvraj and Aditya Soni, “Melinda Gates to exit Gates Foundation with $12.5 billion for own charity work,” Reuters, May 13, 2024, https://www.reuters.com/business/melinda-gates-step-down-co-chair-bill-melinda-gates-foundation-2024-05-13/. Accessed May 15, 2024.

[vii] Singh, Medha and Pranav Kashyap, “GameStop, AMC tumble as two-day rally in meme stocks loses momentum,” Reuters, May 15, 2024, https://www.reuters.com/business/gamestop-amc-soar-frankfurt-meme-stock-rally-roars-2024-05-15/. Accessed May 15, 2024.

[viii] Seal, Dean, “Regulators Probe Alphabet’s Waymo After 22 Self-Driving Car Incidents,” Wall Street Journal, May 14, 2024, https://www.wsj.com/business/autos/regulators-probe-alphabets-waymo-after-22-self-driving-car-incidents-996fde65. Accessed May 15, 2024.