Topley’s Top 10 – May 05, 2023

1. Alot of Articles Floating Around About What S&P Does Post Rate Hike Cycle….Wide Range of Outcomes

Liz Ann Sonders Focusing only on the average would suggest a pattern of weakness leading into the final hike, some strength in the immediate aftermath of the final hike, and then a significant sell-off out to about 100 trading days following the final hike. But, take a look at the same average in the second chart below with the full range of outcomes based on the 14 cycles since the S&P 500’s inception in 1928. Obviously, there has been a wide range of outcomes—generally in the range of +30% to -30% over the span of the subsequent year.

The accompanying table below details each cycle, with the date of the final hike, along with S&P 500 performance at the six-month and one-year points. Pattern? Not so much. This highlights that there are always myriad influences on market behavior—not just monetary policy. But it also reinforces one of my favorite admonitions: “Analysis of an average can lead to average analysis.” While penning this commentary, I saw several headlines that flashed something along the lines of “typically, the final rate hike has been a positive for stocks”… there is no “typical” when it comes to this analysis

2. High Yield Bonds ..Gundlach Says Chart to Watch.

Gundlach “When high-yield bonds are suffering, it’s hard to make the case for equities,” he said

HYG 4th run up to 200- week moving average

3. EV Boom and New Infrastructure Build Out But….LIT ETF About to Break to New Lows.

LIT approaching 2021 lows.

4. Tech Measure…CRM

Salesforce big rally off lows but stopped dead at 200 week moving average.

5. Carl Icahn’s Stock -40% Since Hindenburg Research Report

6. Starbucks and Chipotle

Starbucks ran up to previous high

CMG breaks out to new highs

7. Israeli startup funding hits lowest mark in five years…-70%

Two reports conducted by the Start-Up Nation Policy Institute, and by IVC Data and Insights with LeumiTech show worrying trends for Israel’s tech sector. Only $1.7 billion were invested during the first quarter of 2023 in Israeli tech companies compared to $6.7 billion in the first quarter of 2022

Meir Orbach

8. A Couple Economic Indicators Updated.

Jack Ablin Cresset -Business optimism and building permits

9. The Age of AI has begun-Bill Gates

Artificial intelligence is as revolutionary as mobile phones and the Internet.By Bill Gates

In my lifetime, I’ve seen two demonstrations of technology that struck me as revolutionary.

The first time was in 1980, when I was introduced to a graphical user interface—the forerunner of every modern operating system, including Windows. I sat with the person who had shown me the demo, a brilliant programmer named Charles Simonyi, and we immediately started brainstorming about all the things we could do with such a user-friendly approach to computing. Charles eventually joined Microsoft, Windows became the backbone of Microsoft, and the thinking we did after that demo helped set the company’s agenda for the next 15 years.

The second big surprise came just last year. I’d been meeting with the team from OpenAI since 2016 and was impressed by their steady progress. In mid-2022, I was so excited about their work that I gave them a challenge: train an artificial intelligence to pass an Advanced Placement biology exam. Make it capable of answering questions that it hasn’t been specifically trained for. (I picked AP Bio because the test is more than a simple regurgitation of scientific facts—it asks you to think critically about biology.) If you can do that, I said, then you’ll have made a true breakthrough.

I thought the challenge would keep them busy for two or three years. They finished it in just a few months.In September, when I met with them again, I watched in awe as they asked GPT, their AI model, 60 multiple-choice questions from the AP Bio exam—and it got 59 of them right. Then it wrote outstanding answers to six open-ended questions from the exam. We had an outside expert score the test, and GPT got a 5—the highest possible score, and the equivalent to getting an A or A+ in a college-level biology course.

Once it had aced the test, we asked it a non-scientific question: “What do you say to a father with a sick child?” It wrote a thoughtful answer that was probably better than most of us in the room would have given. The whole experience was stunning.  I knew I had just seen the most important advance in technology since the graphical user interface.  This inspired me to think about all the things that AI can achieve in the next five to 10 years.

The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.

Philanthropy is my full-time job these days, and I’ve been thinking a lot about how—in addition to helping people be more productive—AI can reduce some of the world’s worst inequities. Globally, the worst inequity is in health: 5 million children under the age of 5 die every year. That’s down from 10 million two decades ago, but it’s still a shockingly high number. Nearly all of these children were born in poor countries and die of preventable causes like diarrhea or malaria. It’s hard to imagine a better use of AIs than saving the lives of children.

I’ve been thinking a lot about how AI can reduce some of the world’s worst inequities. In the United States, the best opportunity for reducing inequity is to improve education, particularly making sure that students succeed at math. The evidence shows that having basic math skills sets students up for success, no matter what career they choose. But achievement in math is going down across the country, especially for Black, Latino, and low-income students. AI can help turn that trend around.

Climate change is another issue where I’m convinced AI can make the world more equitable. The injustice of climate change is that the people who are suffering the most—the world’s poorest—are also the ones who did the least to contribute to the problem. I’m still thinking and learning about how AI can help, but later in this post I’ll suggest a few areas with a lot of potential.

In short, I’m excited about the impact that AI will have on issues that the Gates Foundation works on, and the foundation will have much more to say about AI in the coming months. The world needs to make sure that everyone—and not just people who are well-off—benefits from artificial intelligence. Governments and philanthropy will need to play a major role in ensuring that it reduces inequity and doesn’t contribute to it. This is the priority for my own work related to AI.

Any new technology that’s so disruptive is bound to make people uneasy, and that’s certainly true with artificial intelligence. I understand why—it raises hard questions about the workforce, the legal system, privacy, bias, and more. AIs also make factual mistakes and experience hallucinations. Before I suggest some ways to mitigate the risks, I’ll define what I mean by AI, and I’ll go into more detail about some of the ways in which it will help empower people at work, save lives, and improve education.

Defining artificial intelligence Technically, the term artificial intelligence refers to a model created to solve a specific problem or provide a particular service. What is powering things like ChatGPT is artificial intelligence. It is learning how to do chat better but can’t learn other tasks. By contrast, the term artificial general intelligence refers to software that’s capable of learning any task or subject. AGI doesn’t exist yet—there is a robust debate going on in the computing industry about how to create it, and whether it can even be created at all.

Developing AI and AGI has been the great dream of the computing industry. For decades, the question was when computers would be better than humans at something other than making calculations. Now, with the arrival of machine learning and large amounts of computing power, sophisticated AIs are a reality and they will get better very fast.

I think back to the early days of the personal computing revolution, when the software industry was so small that most of us could fit onstage at a conference. Today it is a global industry. Since a huge portion of it is now turning its attention to AI, the innovations are going to come much faster than what we experienced after the microprocessor breakthrough. Soon the pre-AI period will seem as distant as the days when using a computer meant typing at a C:> prompt rather than tapping on a screen

10. How to Be Resilient.

Eric Barker How to Be Resilient

  • Emotional Regulation: When feelings overwhelm you, you can’t make good decisions. You’re an emotional crash test dummy. Slow down and get some distance. Notice and name your emotions. Then reappraise. Is this really that bad? Are these thoughts useful?
  • Optimism: When we can’t see a potential positive outcome, it’s rational to give up. Consider your Best Possible Self. See difficulty as transient, local, and controllable so you stop feeling like a pigeon in life’s shooting gallery.
  • Cognitive Agility: When you immediately jump to the worst-case scenario, you’re going to want to quit. Take the time to consider more possibilities. And then ask yourself which one you’d bet the mortgage on being most likely. Otherwise, you’ll feel like a shut-in in a house of horrors.
  • Self-Compassion: You’re letting someone walk all over you. But the person doing the walking is also you. Take that compassion you usually extend to others and offer some of it to yourself.
  • Self-Efficacy: You build confidence and agency by accomplishing things often enough that it changes how you see yourself. Start small and achieve goals until you start to see yourself as “the kind of person who achieves their goals.”

Everyone struggles. Everyone. Life is about how we see those challenges and how we respond to them.

The most important thing is to practice the above techniques. Do not let this post be another thing that just gets tossed into the attic of the world wide web. Until Silicon Valley invents a way for me to grab you by the lapels over the internet, you need to practice the above yourself. I’m just an NPC in the game of your life offering you a new quest.

Do not forget all the times that felt so horrible but you made it through. This is one of the critical lessons of life. All the times of shrieking madness that became little more than funny stories. “This too shall pass” isn’t enough…

I believe in “This too shall be hysterical.”