Public | April 11th, 2024

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GOOD MORNING

Here's everything you need to know today: Inflation's grip tightens as the CPI jumps unexpectedly to 3.5%, casting shadows on summer economics and the Fed's rate-cut roadmap.

Nvidia teams up with Georgia Tech to democratize AI with a student-focused supercomputer, heralding a new era of academic innovation.

Hong Kong is setting the stage for the first Asian spot Bitcoin ETFs, potentially revolutionizing the crypto investment landscape.

Meanwhile, the wealthy seek golden visas amidst U.S. debt concerns, indicating a trend of millionaire migration for economic and political stability.

Let’s dive into more detail below.

ECONOMICS

Economic Outlook Dims as CPI Jumps

March's CPI surge defies forecasts, sparking fresh concerns for the Fed's next move

BREAKING NEWS
Just when we thought inflation was ticking down and we could enjoy summer on the relative cheap, a fresh CPI print has emerged, showing inflation has its persistent grip on the economy, casting doubt on the Federal Reserve's ability to slash interest rates in the near future. In March, the Consumer Price Index (CPI) surged unexpectedly, raising the annual inflation rate to 3.5%.

This uptick defies expectations and fuels discussions about the tenacity of inflation and its influence on monetary policy.

WHAT HAPPENED
The Labor Department's Bureau of Labor Statistics reports that the CPI, which gauges the average change over time in the prices paid by consumers for a market basket of goods and services, increased by 0.4% in March. This rise placed the year-over-year inflation rate at a stout 3.5%. Economists had pegged their forecasts on a more moderate 0.3% rise, with a year-over-year level of 3.4%. Core CPI, stripping out the often volatile food and energy prices, also climbed by 0.4%, indicating a 3.8% rise from the previous year, surpassing estimates once more.

Following the announcement, the stock market recoiled and Treasury yields soared, signaling investor apprehension. Significant contributors to this uptick were shelter and energy costs. While food prices manifested a modest monthly increase, certain food categories, such as meats and eggs, saw pronounced rises. Simultaneously, real wages stagnated, augmenting concerns for workers' purchasing power amidst climbing prices.

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BTC / ETF

Hong Kong Sets Sights on First Bitcoin ETF

Hong Kong’s big move into a Bitcoin ETF could reposition the city as a leading financial hub, challenging global giants

BREAKING NEWS
Hong Kong is poised to bolster its financial market by welcoming spot Bitcoin exchange-traded funds (ETFs), with regulatory nods expected to drop as early as next week. This move could restore the city's luster as a global financial nucleus by becoming the first in Asia to offer such ETFs, notably ahead of market forecasts and perhaps challenging the likes of BlackRock and others.

WHAT HAPPENED
Sources privy to the developments indicate a brisk pace set by Hong Kong regulators to approve the launch of spot Bitcoin ETFs within the month. This accelerated timeline is part of the city's effort to regain its status as a prime financial hub, dimmed by the pandemic and geopolitical frictions.

This initiative would channel fresh international investments and elevate cryptocurrency's role in the mainstream financial sector. "The significance of Hong Kong ETFs is far-reaching," notes Adrian Wang of Metalpha, reflecting industry optimism. The U.S. has seen substantial inflows into similar Bitcoin-focused financial products launched earlier this year. Hong Kong's foray into the scene comes as Bitcoin's value soars, recently hitting a historic peak. Bitcoin ETF trading volume hit over $110 billion in March, nearly tripling the previous months.

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WEALTH

The Wealthy Are Flocking For Golden Visas

As the US debt climbs and political frictions increase, the country's most affluent are taking decisive steps to ensure their wealth and families' futures

BREAKING NEWS
In an escalating trend, there has been a sharp increase in the migration of millionaires across international borders, with numbers set to exceed pre-pandemic levels by 2024.

This movement, driven by a complex blend of geopolitical tensions and the quest for diversified domiciles, signals a surge in high-net-worth individuals seeking alternative citizenships.

Investment-driven visa programs in European nations, particularly Portugal and Malta, have seen increased interest from wealthy Americans, reflecting a strategic pivot in safeguarding global mobility and lifestyle freedoms.

WHAT HAPPENED
The landscape of global wealth is witnessing a transformative shift as affluent Americans explore additional visa or citizenship options beyond their native soil. This isn't a mass exodus; instead, it’s a calculated expansion of passport portfolios against the backdrop of global instability. Henley & Partners, steering this conversation, pinpoint Portugal's "Golden Visa" program as a prime choice for those seeking European residency through investment—echoing a broader sentiment for security and ease of travel. Beyond leisure, the secondary citizenships offer tangible business advantages, presenting safer travel options and facilitating cross-border transactions for U.S. executives.

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AI

Nvidia and Georgia Tech Ignite AI Revolution

Nvidia's initiative puts unparalleled computational power into the hands of future academics and innovators

BREAKING NEWS
Nvidia, one of the top dogs in AI and GPU’s announced a groundbreaking collaboration with the Georgia Institute of Technology (Georgia Tech), unveiling the first artificial intelligence (AI) supercomputer tailored for student use.

This groundbreaking initiative aims to usher in a new era where the boundary-pushing power of supercomputing is accessible to the learners who stand to shape the future of technology.

The unveiling highlights a shift towards democratizing advanced computational resources, a move that could redefine how students interact with and contribute to the rapidly evolving AI landscape.

WHAT HAPPENED
This initiative marks a significant, one of a kind milestone, as it positions Nvidia's advanced graphics processing units (GPUs) - the engines behind the AI revolutions at OpenAI, Alphabet, and Meta - within reach of the academic community. The supercomputer, powered by 160 of Nvidia’s H100 GPUs, boasts capabilities far beyond the computational dreams of many researchers, let alone students.

It's designed to perform complex calculations at speeds so fast, one GPU could execute tasks in a second that would take tens of thousands of students over two decades to complete manually. Initially, this resource is exclusively available to Georgia Tech's undergraduate students, with plans for broader access across all student levels by spring 2025.

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1. Hot Inflation Report Triggers Market Selloff

On Wednesday, a higher-than-expected March inflation report led to a sharp market decline, with the Dow Jones Industrial Average closing 422 points lower. This inflation data likely delayed anticipated interest rate cuts by the Federal Reserve, impacting investor sentiment negatively.

2. Federal Reserve's Concerns Over Inflation

The release of March's Fed meeting minutes revealed officials' worries that inflation is not moving towards the central bank's 2% target at a desired pace, adding to the market's anxieties.

3. Broad Market Indexes Suffer

Following the inflation report, major market indexes, including the S&P 500 and Nasdaq Composite, experienced significant declines. Except for the energy sector, all market sectors closed in the negative, with real estate leading the losses at 4.1%.

4. Shift in Rate Cut Expectations

The CPI data for March, indicating a 0.4% monthly increase and a 3.5% year-over-year rise, led traders to adjust their expectations for Federal Reserve rate cuts, now foreseeing a lower likelihood of a rate reduction in June.

5. Treasury Yields and Dollar Strength

The 10-year Treasury yield soared above 4.5%, and the dollar reached its highest level against the yen since mid-1990, reflecting the market's reaction to the inflation report and its implications for future interest rates.

6. Declines in Bank and Industrial Shares

Bank shares, including JPMorgan Chase, and industrial shares like Honeywell, saw declines amid concerns that sustained higher rates could hamper economic growth. Technology stocks, such as Microsoft and Apple, also retreated.

7. Energy Sector Resilience

Despite the broader market downturn, the energy sector managed to post gains, buoyed by rising oil prices amid ongoing geopolitical tensions and concerns over oil stockpiles.

8. Investor Sentiment and Market Strategists' Views

The unexpected inflation report prompted several investors and strategists to adopt a more cautious stance on the Federal Reserve's rate-cutting timeline, highlighting the importance of upcoming earnings reports in determining market direction.

9. Impacts on Rate-Sensitive Sectors

Following Wednesday's market reaction, rate-sensitive sectors like real estate and utilities experienced significant losses as Treasury yields leaped, highlighting the challenges faced by these sectors in a high-interest-rate environment.

10. Future Market Outlook

As Wall Street braces for another inflation report and the early stages of the earnings season, investor focus remains on the Federal Reserve's next moves and how inflation dynamics could influence market trends in the coming months.

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Today's insights are courtesy of Public.com. Public.com has just launched options trading, and if you activate your account by March 31, you can earn an $0.18 rebate on every single options trade.

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