Crypto's Volatility-Loving Fans Bet on Stablecoins For Mainstream Success
Welcome back to The Forecast from Bloomberg Weekend, where we help you think about the future — from next week to next decade.
This weekend we're looking at stablecoins taking crypto mainstream, nuclear deterrence theories put to the test, the chances Israel strikes Iran and Florida's struggling real estate market.
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Yahoo
42 minutes ago
- Yahoo
Corporate Cash Levels Are Starting to Fall
(Bloomberg) -- The latest earnings period brought what might be an early warning sign about credit quality for high-grade US companies. Next Stop: Rancho Cucamonga! Where Public Transit Systems Are Bouncing Back Around the World ICE Moves to DNA-Test Families Targeted for Deportation with New Contract US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn Trump Said He Fired the National Portrait Gallery Director. She's Still There. Cash levels at blue-chip companies are shrinking, when excluding results from the most-cash-rich corporations. Among members of the S&P 500 that have posted results, cash levels for the latest quarter fell nearly 1% compared with the last three months of 2024. That's according to a Bloomberg News analysis that focuses on non-financial companies with less than $30 billion of cash. The group's cash holdings, now at $1.14 trillion, have broadly been declining since the third quarter of 2023, when they peaked at $1.21 trillion. While companies are still generally performing well, shrinking cash levels can be a sign of business slowing and profits falling. That's a particular concern now as escalating trade wars potentially boost the cost of foreign inputs, weigh on profits, and increase inflation. Bond prices for many US companies leave little room for error. Spreads, or risk premiums, on US high-grade corporate debt averaged just 0.85 percentage point on Friday, the tightest level since March. The average level for the last two decades is closer to 1.5 percentage point. 'It's actually a dangerous position to be in,' said Michael Contopoulos, deputy chief investment officer at Richard Bernstein Advisors. 'If you bring down cash balances and you find yourself having to deal with higher inflation and higher volatility, your debt is going to get punished.' For the biggest cash generators, the story is different. Giants from Meta Platforms Inc. to Microsoft Corp. and Nvidia Corp. generally posted strong earnings this quarter. The top 12 biggest holders of cash saw their holdings rise about 1.4%, to around $756.7 billion. The dozen companies, which also include companies outside of the technology industry like Johnson & Johnson, each have more than $30 billion of cash and marketable securities on their books, and hold in total about 40% of the S&P 500's cash. The biggest companies can distort averages, and by some measures many high-grade companies aren't looking great. Leverage levels, for example, have been better about 80% of the time over the last two decades, a UBS Group AG analysis found. But by other measures companies are still performing well. Investment-grade firms are holding more cash as a share of their assets than they have on average over the past decade, according to data from S&P that analyzed North American companies. It's likely the behavior that has contributed to the declines in cash — such as boosting share buybacks — has reversed this quarter as companies prepare for a slowdown, Bank of America credit strategist Yuri Seliger said. That's why some money managers are stopping short of saying that it's time to prepare for the worst. 'You still want to be positioned in companies that have the ability to weather a range of scenarios, but at the same time, I don't think you want to price your entire portfolio to the worst possible outcome,' said Maulik Bhansali, senior portfolio manager at Allspring Global Investments. If any credit weakness were to hit, it would likely start with smaller companies, and in leveraged finance or even private credit, said Matthew Mish, UBS' head of credit strategy. A close look does show some signs of weakness, at least in the smaller firms. Corporate profits for domestic, non-financial companies declined by about 3% in the first quarter compared to the previous period, Bureau of Economic Analysis data shows. 'The large liquid megacaps have certainly outperformed,' Mish said. 'Under the hood, there certainly is a little bit more weakness.' Week In Review Elon Musk is selling $5 billion of debt to help fund his artificial intelligence startup xAI Corp., the latest in a series of fundraising efforts across his business empire as the billionaire pivots away from politics and returns to running his companies. As part of that bond and loan sale, xAI opened its books to investors, showing the company generated about $52 million of gross revenue in the first quarter, and lost $341 million before interest, tax, depreciation and amortization. The sale may be complicated by a very public feud between Trump and Musk. Hong Kong developer New World Development Co. is sliding deeper into distress after its recent decision to delay interest payments on some bonds, marking the latest flashpoint in a years-long crisis in China's property market. Hedge fund founder George Weiss filed personal bankruptcy months after a federal judge ruled he's liable for more than $100 million in debt his eponymous firm owes Jefferies Financial Group Inc. JPMorgan Chase & Co. is sounding out investors for an almost $2 billion loan for Trucordia, the latest instance of a Wall Street bank refinancing debt that insurers initially secured from private credit firms. A group of Wall Street banks, led by Jefferies Financial Group Inc. and UBS Group AG, have started pre-marketing more than $1 billion of debt to fund Bain Capital's acquisition of restaurant chain operator Sizzling Platter. Owens & Minor, a distributor of medical supplies, canceled its planned purchase of Rotech Healthcare Holdings, sending its bonds on a wild ride. Notes it sold in April, with a 10% coupon and due 2030, dropped, because they can be redeemed at par and had been trading above face value. Many other securities the company had sold rallied. Banks and private credit funds are competing with each other to provide as much as €2.5 billion ($2.9 billion) of debt to insurance broker Diot-Siaci Group. Clearlake Capital-backed Wellness Pet Company snagged fresh financing and completed the first step of a debt deal that involves creditors taking a reduction in the value of the original amount they lent. German autoparts maker ZF Friedrichshafen AG pulled in more than €4.5 billion ($4.6 billion) in orders for a new bond sale, signaling strong investor support for shoring up its finances during a rocky stretch for the sector. Delta Air Lines Inc. sold $2 billion of investment-grade bonds Thursday to help repay a government loan it took out during the pandemic to pay employees. A $2.15 billion leveraged loan has been launched to help fund the planned acquisition of Colonial Enterprises Inc. Bankrupt genetic analysis company 23andMe will hold a second auction for its cache of DNA data with an opening bid of $305 million from a group led by the company's former chief executive officer, Anne Wojcicki. A subsidiary of Sunnova Energy International Inc. filed for bankruptcy in Texas as its parent struggled to convince creditors to give it funding to turn around its business in an out-of-court process. EchoStar Corp., the wireless and pay-TV operator controlled by billionaire Charlie Ergen, has decided to skip interest payments on three bonds after skipping another late last week. On the Move MUFG Securities Americas Inc. has hired two longtime leveraged loan bankers — Adam Hoffman and Roger Gilbert — as it continues to grow that business. Hoffman joins as head of loan trading while Gilbert will serve as head of loan sales. Both previously worked at Macquarie Group Ltd., which shuttered its US debt capital markets arm earlier this year to focus on private credit. Lane42 Investment Partners founder Scott Graves is building out his senior leadership team, hiring former CVC Capital Partners and Oaktree Capital Management employees to add to the asset manager he founded earlier this year. London-based hedge fund Redhedge Asset Management LLP has hired two portfolio managers amid growing US investor interest for European credit. Won Choi joined from Maven Investment Partners to oversee credit opportunities and special situations. Nick Campregher, formerly at ExodusPoint Capital Management, started last month and is focusing on financials. Before moving to the asset management industry, he had spent about a decade at UBS Group AG as a trader and risk manager. --With assistance from Tom Contiliano. Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling Is Elon Musk's Political Capital Spent? What Does Musk-Trump Split Mean for a 'Big, Beautiful Bill'? Cuts to US Aid Imperil the World's Largest HIV Treatment Program ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
A professor testing ChatGPT's, DeepSeek's and Grok's stock-picking skills suggests stockbrokers should worry
Is artificial intelligence coming for the jobs of Wall Street traders? An assistant professor of finance at the University of Florida, Alejandro Lopez-Lira, has spent the past few years trying to answer that question. Lopez-Lira has been experimenting with ChatGPT, DeepSeek and Grok to see if AI can be used to pick stocks. So far, he's impressed with what the currently available AI chatbots can do when it comes to trading equities. 'He failed in his fiduciary duty': My brother liquidated our mother's 401(k) for her nursing home. He claimed the rest. I help my elderly mother every day and drive her to appointments. Can I recoup my costs from her estate? 'The situation is extreme': I'm 65 and leaving my estate to only one grandchild. Can the others contest my will? My new husband gave me a contract and told me to 'sign here' — but I refused. It was the best decision of my life. My daughter's boyfriend, a guest in my home, offered to powerwash part of my house — then demanded money In an interview, Lopez-Lira acknowledged that AI is prone to making mistakes, but he has not seen the three versions he's been using do anything 'stupid.' His work comes as more market participants are thinking about the implications of AI for investing and trading. 'I don't know what tasks out there analysts are doing with information that can't be done with large language models,' Lopez-Lira said. 'The only two exceptions are things that involve interacting in the physical world or having in-person conversations. But, other than that, I would imagine all of the tasks or most of the tasks can already be automated.' Shortly after OpenAI Inc. released ChatGPT in 2022, Lopez-Lira began testing the chatbot's skills. He wanted to know if ChatGPT, and AI in general, would show an ability to pick stocks. While there are numerous ways to approach that question, Lopez-Lira began with a simple exercise: Could the AI application accurately interpret whether a headline on a news story is good or bad for a stock? What he found surprised him. Conducting a back test simulating historical stock-market returns, the study used more than 134,000 headlines from press releases and news articles for over 4,000 companies that were pulled from third-party data providers. The headlines were fed into ChatGPT using a programming language called Python. ChatGPT would then decide whether a headline was positive for a company, negative or unknown. The results were then saved in a data file and uploaded into statistical software in which headlines perceived as positive would result in a stock purchase. Negative headlines would trigger short sales, effectively betting against a stock in anticipation that it will fall in price. If ChatGPT was uncertain, no action was taken. Because this was an academic simulation, no actual stocks were traded. But the software did compare the simulated performance against historical outcomes. The stock picks were made daily, with a median of 70 stocks bought and a median of 20 shorted. For Lopez-Lira, the tricky thing about using a back-testing approach was that the AI could know what, in the end, had transpired. OpenAI had trained ChatGPT in 2022 on data up until September 2021. So Lopez-Lira tested the chatbot using headlines after October 2021. This way, ChatGPT wouldn't know what was going to happen and would need to rely on reason to come to conclusions. His findings were released on the SSRN preprint platform in April 2023 in a paper titled 'Can ChatGPT Forecast Stock Price Movements? Return Predictability and Large Language Models.' The study, currently being peer reviewed, found that ChatGPT had 'significant predictive power for economic outcomes in asset markets.' The GPT-4 version had an average daily return of 0.38% with a compounded cumulative return of over 650% from October 2021 to December 2023. Now, obviously, this academic study had limitations. In the real world, frictions exist that would strain returns, including brokerage transaction costs and fees; the availability of shares; taxes; and price impact, which is when relatively large trades move a stock's price. Additionally, about 76% of the gains came from shorts, a trading strategy that can be more fraught due to short-interest fees and the need to find the shares to borrow and sell short. 'So, our results on paper are much more optimistic than what the performance in reality would be with a reasonable investment size,' Lopez-Lira said. But the tilt toward positive returns was enough for him to conclude that ChatGPT had understood economic markets and shown an ability to forecast stock outcomes. About a month after the preprint was published, Lopez-Lira got the chance to take his experiment outside of the academy after being contacted by Autopilot, an investment app that mimics the trades of notable public figures. He was asked to help create a portfolio that would be based on investment picks made by ChatGPT. It was an opportunity for him to see how his academic experiment would perform in the real world. By September 2023, he'd begun providing the Autopilot app with the investment picks made by ChatGPT on a monthly basis. The Autopilot team would then upload the selections, and Autopilot users could link their brokerage accounts to the stock picks. This time, since real money was involved, Lopez-Lira had to do more than just feed ChatGPT a few news headlines. He had to provide it with a wide range of information to be sure it was making decisions based on the macroeconomic environment and company financials. Available AI models are not currently in a place where you can just ask them to pick investments, said Lopez-Lira. The process still requires a human in the loop to feed it with the information it needs to consider before making a decision. This is mostly because AI models aren't trained on real-time data, which means their knowledge is often outdated, including for such basics as the price of a stock's last trade. Even as AI models are able to conduct live web searches, they don't always know what information to search for in order to make the most informed decisions, he added. 'Large language models are tricky to handle, they can make stuff up and sometimes they don't have the right information,' Lopez-Lira said. 'So you have to know how to prompt the AI.' The portfolio managed by ChatGPT would consist of 15 positions, 10 of which had to be stocks from the S&P 500 SPX and five of which had to be exchange-traded funds that have exposure to a sector or industry. To get there, Lopez-Lira used Python to pull information from third-party data providers and news websites about the macroeconomic environment, geopolitical risks, company financials and the latest prices for stocks within the S&P 500. He then asked ChatGPT to consider the information and assign companies a score on a scale of 1 to 100, with a higher score representing a better investment. Once the AI had decided on its scoring, it was then asked to create a portfolio of stocks and exchange-traded funds based on that information. More recently, in February, Lopez-Lira added investing accounts on Autopilot that use Grok and DeepSeek. Since then, the Florida professor has been gradually removing restrictions placed on the three AI models. For example, in March, the models were allowed to decide on the weightings of each holding. In April, the models were freed to balance up to 15 positions outside the initial parameters of 10 stocks and five ETFs, allowing them to pick a combination of their choosing. They could also pick ETFs that had exposure to additional asset classes, like bonds and commodities, excluding ones that use leverage, derivatives and short positions. To date, the latest AI models running the investment accounts are OpenAI's o3, xAI's Grok 3 and DeepSeek R1. The models are periodically updated based on the latest versions available. Lopez-Lira also rotates which AI model he uses to summarize macroeconomic risks and score companies based on the 1-to-100 scale, but all three models receive the same input, regardless of which model did the screening. Below is an example of what each AI application picked for its 15 positions on April 1, the day before President Donald Trump's 'liberation day' announcement on tariffs, until May 5, when the selections were rebalanced. It was based on data Lopez-Lira provided up until March 31. He used Grok 3 to organize the data. All three AI applications were fed the same information, but OpenAI's o1 pro and Grok 3 were able to include information from web searches, according to Lopez-Lira. The tables below show each model's selection, including the weightings, reason (thesis), the advantage of the position (edge) and the risk associated with the position. Asset Ticker symbol Weight Thesis Edge Risk 1 SPDR S&P 500 ETF Trust SPY 15% Core broad-market exposure to capture potential equity rebound if inflation/cooler data lead to Fed pivot or if tariffs don't derail sentiment. Broad diversification; quick participation in any relief rally. If inflation re-accelerates or tariffs escalate, S&P could tumble broadly. 2 iShares 20+ Year Treasury Bond ETF TLT 8% Potential capital-gains hedge if rates drop on recession fears or Fed rate cut signals. Good inverse correlation to equities if risk-off. May rally on rate-cut bets. If inflation remains sticky, yields could rise, hurting long-term Treasuries. 3 SPDR Bloomberg 1-3 Month T-Bill ETF BIL 5% Capital preservation and liquidity amid uncertainty of tariffs & data in next month. Very low volatility, stable yield. Opportunity cost if equities rally strongly. 4 Inc. AMZN 6% High-scoring megacap e-commerce and cloud. Could rebound if consumer spending remains decent and AWS demand persists. Scale, brand and diversified revenue streams. Potential shift to safer large-cap tech if conditions worsen. Supply-chain disruptions from tariffs, consumer slowdown. 5 Monolithic Power Systems Inc. MPWR 5% High-scoring semiconductor with AI & China angle. Potential bounce from oversold chip sector. Unique margin profile, rumored rare buy opportunity. Renewed U.S.-China tension, cyclical chip downturn. 6 American Tower Corp. AMT 5% REIT with strong telecom/data-center growth. Pullback could offer upside if yields stabilize. Global diversified tower portfolio, stable tenant contracts, 3%+ dividend yield. REITs pressured by rising rates or slowdown. 7 BlackRock Inc. BLK 5% Large asset manager, high score. Gains from inflows if equities stabilize/rally post-Fed. Broad product lineup, global brand. Typically sees net inflows when risk appetite improves. Market downturn would pressure AUM & fees. 8 Chipotle Mexican Grill Inc. CMG 4% High-scoring consumer brand with resilient operating metrics. Absorbing tariffs to maintain loyalty. Loyal clientele, strong brand, margin-expansion potential. Cost pressures, discretionary slowdown risk. 9 Prudential Financial Inc. PRU 4% Undervalued life insurer, 4.8% dividend. Could benefit if stable/higher interest rates persist in short term. Low P/E, stable dividends, globally diversified. Big drop in yields or an equity selloff impacting annuity business. 10 iShares US Home Construction ETF ITB 6% Rate-sensitive cyclical ETF. Potential bounce if mortgage rates dip or Fed signals pivot in early May. Housing supply tight. Fed-pivot hopes can spark a near-term rally. If inflation doesn't cool or economy slows significantly, builders could tank. 11 Visa Inc. V 4% Leading payment network with secular digital-payment tailwinds. Adds noncyclical growth. High ROE, stable transaction fees, less capital risk vs. banks. Prolonged consumer-spending slowdown or cross-border travel disruptions. 12 iShares TIPS Bond ETF TIP 6% Hedge vs. stubborn inflation, diversifier from nominal Treasurys. If inflation remains higher, TIPS can outperform plain Treasuries. If inflation prints keep dropping, TIPS could lag nominal bonds in total return. 13 SPDR S&P Homebuilders ETF XHB 4% Additional housing-related beta, includes home-improvement retailers, furnishing and building product firms. Diversified approach to housing ecosystem, can rally with lower rates. Sensitive to consumer confidence and Fed surprises. 14 Schwab US Dividend Equity ETF SCHD 8% Dividend-focused ETF with quality tilt. Adds stability and yield in uncertain macro environment. Defensive factor, historically outperforms in sideways markets. Could lag high-beta rally if markets surge on big growth/tech rebound. 15 Digital Realty Trust Inc. DLR 5% Data-center REIT, short-term correction could rebound if yields ease. Tech demand for data centers remains robust. Sector tailwinds from cloud and AI. 3%+ dividend, stable REIT structure. REIT interest-rate risk; slowdown in enterprise spending on data infrastructure. Total 90% GPT's 15 picks amounted to a 90% weighting. But the model showed that its weightings equaled 100%, a 10% flaw. Lopez-Lira asked GPT why the sum was 90%, and it responded that it intentionally left a 10% cash buffer due to uncertain market conditions. It's unclear whether the answer was truthful or intended to cover for its mistake. Asset Ticker symbol Weight Thesis Edge Risk 1 American Tower Corp. AMT 5% Turnaround driven by organic growth, data-center focus and strong fundamentals. New management's delivery on promises and a 3.13% dividend yield offer stability and growth. Tariffs and stagflation could pressure growth and margins. 2 BlackRock Inc. BLK 5% Leading asset manager with a diversified portfolio resilient to market volatility. Record $641B inflows in 2024 and private-asset growth potential enhance stability. Economic slowdown and inflation may impact the asset-management sector. 3 Prudential Financial Inc. PRU 5% Undervalued insurer with solid asset-based businesses and international operations. 4.84% dividend yield and a low 7.6 forward P/E provide a margin of safety. Economic slowdown and inflation could affect performance. 4 Cintas Corp. CTAS 5% Strong performer in support services with consistent cash-flow generation. Outperformance in a lagging sector and a 17.5% profit margin ensure resilience. Slowing GDP growth may dampen short-term performance. 5 Waste Management Inc. WM 5% Environmental-services leader with strong financials and growth via acquisitions. Pricing power and expansion into medical waste and renewables bolster stability. Economic headwinds and trade tensions could impact growth. 6 Cencora Inc. COR 5% Steady growth in healthcare distribution with an essential supply-chain role. Strategic acquisitions and healthcare's inelastic demand provide a defensive edge. Negative free cash flow and market underappreciation pose risks. 7 TJX Cos. Inc. TJX 5% Apparel retail leader leveraging tariff-related buying opportunities and sales growth. Discount model and strong brand portfolio thrive in cautious spending environments. Weak consumer spending could limit short-term growth. 8 Keurig Dr Pepper Inc. KDP 5% Beverage giant with strong brands and demand for premium drinks despite economic strain. 2.69% dividend yield and recent earnings beat support stability. Declining coffee sales and high debt levels may hinder performance. 9 iShares 20+ Year Treasury Bond ETF TLT 15% Long-term Treasury bonds benefit from a flight to safety and anticipated rate cuts in 2025. High-duration exposure capitalizes on falling rates, offering a hedge against volatility. Delayed rate cuts or persistent inflation could reduce bond-price gains. 10 iShares TIPS Bond ETF TIP 15% TIPS provide inflation protection amid resurfacing inflation concerns at 2.9% core PCE. Real yield adjusts with inflation, safeguarding purchasing power in a stagflation scenario. Falling inflation expectations could lead to underperformance versus nominal bonds. 11 Utilities Select Sector SPDR Fund XLU 5% Utilities sector offers stability and defensiveness in a slowing economy. High dividends and low volatility make it a safe haven amid market turbulence. Regulatory changes or sector-specific disruptions could affect returns. 12 Consumer Staples Select Sector SPDR Fund XLP 5% Consumer staples provide noncyclical stability during economic downturns. Essential goods maintain demand, supporting performance in weak consumer environments. Tariff-driven cost increases could squeeze margins. 13 Health Care Select Sector SPDR Fund XLV 5% Healthcare sector benefits from inelastic demand, resilient to economic cycles. Demographic trends and essential services ensure steady growth amid uncertainty. Policy shifts or drug-pricing reforms could impact profitability. 14 SPDR Gold Shares GLD 7.5% Gold acts as a hedge against volatility and geopolitical uncertainty from tariffs. Safe-haven demand rises with trade tensions and economic slowdown. Improved market sentiment or rising real rates could depress gold prices. 15 Vanguard Real Estate Index Fund ETF VNQ 7.5% Real-estate sector diversifies the portfolio and offers stable income via dividends. Broad exposure to REITs provides a buffer against equity volatility with a decent yield. Economic slowdown could reduce property values and rental income. Total 100% Asset Ticker symbol Weight Thesis Edge Risk 1 TJX Cos. Inc. TJX 10% Thrives on tariff-driven inventory discounts and resilient off-price retail demand. Opportunistic buying offsets supply-chain disruptions. Consumer pullback in discretionary spending. 2 Waste Management Inc. WM 8% Steady cash flows from essential waste services; Stericycle acquisition diversifies into medical waste. Pricing power and recession-resistant model. Economic slowdown slightly reduces commercial volumes. 3 Progressive Corp. PGR 8% Insurance demand remains robust amid economic uncertainty; attractive valuation and dividend. Premium hikes offset inflation pressures. Tariffs raise claims costs (e.g., auto parts). 4 BlackRock Inc. BLK 8% Dominant asset manager ($11.6T AUM) benefits from flight to stability and private-market growth. Diversified revenue streams buffer volatility. Slowing inflows if markets remain choppy. 5 Prudential Financial Inc. PRU 8% Undervalued (P/E 7.6) with 4.84% yield; international diversification cushions U.S. slowdown. Asset-based businesses generate steady income. Rising unemployment pressures life insurance. 6 American Tower Corp. AMT 8% Data-center demand surges; Fed rate-cut hopes support REIT valuations. Organic growth (6.5% year-on-year) and 3.13% yield. Tariffs on equipment raise capex costs. 7 Merck & Co., Inc. MRK 7% Defensive pharma play with oncology dominance and 3.61% yield. Global drug-pricing power in inflationary environment. Pipeline setbacks or regulatory risks. 8 Cencora Inc. COR 7% Healthcare distribution is essential; 10% EPS growth at reasonable valuation. Critical middleman role in drug supply chains. Negative FCF limits M&A flexibility. 9 Clorox Co. CLX 6% Pricing power via IGNITE strategy; 3.31% yield in a staple sector. Cost savings offset tariff-driven input inflation. Margin squeeze if pricing elasticity falters. 10 Visa Inc. V 5% Resilient payment network with 54% margins; global transaction growth. Essential infrastructure for digital spending. Consumer debt limits card usage. 11 Kinder Morgan Inc. KMI 5% 4.3% yield with LNG/data center tailwinds; $8.1B backlog insulates against slowdown. Midstream stability amid energy volatility. Tariffs raise pipeline material costs. 12 Intuit Inc. INTU 5% AI-driven tax/accounting tools gain traction in cost-cutting environment. High switching costs and $198B TAM. Tech sell-offs pressure premium valuation. 13 ConocoPhillips COP 5% Domestic energy focus offsets tariff risks; $10B shareholder returns. Willow project boosts long-term production. Oil demand softens in slowing economy. 14 Inc. AMZN 5% Scale mitigates tariff costs; cloud/AI growth offsets retail risks. $101B cash reserves for strategic flexibility. Consumer-spending slowdown hits e-commerce. 15 S&P Global Inc. SPGI 4% Critical data/ratings provider in volatile markets; 27% margins. 'Essential utility' for institutional investors. High valuation (P/E 41.1) risks multiple compression. Total 99% DeepSeek's weightings fell short, amounting to 99%. When Lopez-Lira pointed that out, the AI responded with two possible reasons for the discrepancy. The first was that it could have been based on a rounding issue. The second was that it may have decided to keep a 1% cash allocation. The model could not confirm which option was the accurate reason for the decision. Like any investment strategy, there's risk involved, and past performance isn't guaranteed to continue, Lopez-Lira said. As long as the portfolios buy stocks or stick to long-only positions, he expects them to match the S&P 500's performance, or perhaps over- or underperform by a small margin. Though it's important to note that rotating stocks on a monthly basis outside a tax-advantaged account could lead to tax liabilities for short-term capital gains, which are taxed at a higher rate than assets held for over a year. While Lopez-Lira said his findings suggest AI can mimic the services professional portfolio managers provide, some analysts disagree. Michael Robbins, author of Quantitative Asset Management, noted that, while each model's investing strategy may look like it works, there's no way to know for certain. For example, in the new AI era, there hasn't been a massive stock-market crash or an event like the 2008 financial crisis to determine how an AI-led investment account would respond. You're perhaps thinking that humans are shaped by their own memories and experiences, too. But Robbins said that people live through those experiences. It means a person has navigated an event without foresight, perhaps even with a bit of intuition. Meanwhile, the machines are pretrained. That said, he would equate AI's skills to that of an investment manager who recently entered the workforce and is working from textbook knowledge. Additionally, he noted that while both humans and machines make mistakes, AI can hallucinate, causing it to make more extreme, and unacceptable, errors. It's also important to note that the three AI investment accounts on Autopilot only rebalance monthly, so they aren't able to react to any sudden changes. Finally, Lopez-Lira remains in the loop, overseeing the choices and making sure the appropriate information is considered. For that, he receives a small percentage of revenue from the subscriptions that have opted into the account. Lopez-Lira began managing ChatGPT's portfolio in September 2023. The returns, which are based on the aggregate results of client portfolios, are 43.5% from September 2023 to May 30, 2025, according to Autopilot. The S&P 500 had a total return of 34.7% over the same period, according to Dow Jones Market Data. In comparison, Grok's portfolio returned 2.3% since its inception on Feb. 11 of this year through May 30, according to Autopilot. The S&P 500 had a total return that was down 2.2% over the same period, according to Dow Jones Market Data. DeepSeek was down 0.25% since its inception on Feb. 3 through May 30, according to Autopilot. The S&P 500 had a negative total return of 0.93% for the same period, according to Dow Jones Market Data. 'I'm not wildly wealthy, but I've done well': I'm 79 and have $3 million in assets. Should I set up 529 plans for my grandkids? How do I make sure my son-in-law doesn't get his hands on my daughter's inheritance? Circle's stock is having another big day. What the blockbuster IPO has meant for other cryptocurrency plays. The S&P 500 closes at 6,000 as bulls aim for return to record territory 'I was pushed out of her life when she was 18': My estranged daughter, 29, misuses drugs. Should I leave her my Roth IRA? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
2 hours ago
- Bloomberg
Yield Hunters Fuel a $331 Billion Wave of Emerging Bond Sales
Strong demand from yield-hungry investors is driving a surge in developing-world bond sales as borrowers race to secure financing ahead of any further wobbles in global markets. Since the beginning of the year, emerging-market governments and companies have sold $331 billion in debt denominated in hard currencies like the dollar and euro, according to data compiled by Bloomberg. That is the fastest pace in four years and already surpasses the total in the first half of 2024.
