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Markets

Stocks experienced an upward swing yesterday, with investors largely ignoring a moderate inflation report and focusing instead on the upcoming Fed meeting. Concurrently, Oracle soared to new heights, recording its most impressive performance since 2021 due to soaring demand for AI, leading to a substantial surge in sales for its cloud computing division.

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Finance

Hot New Bitcoin Funds Are Still Waiting for Buy-In from Financial Advisors

Since their launch in January, Bitcoin exchange-traded funds (ETFs) have attracted billions of dollars from investors. However, they have struggled to gain traction among their intended audience: financial advisers who manage trillions of dollars in client assets.

Supporters of the leading cryptocurrency had anticipated that these Bitcoin funds would unlock access to a vast pool of new investors, particularly U.S. financial advisers who collectively supervise $30 trillion in client assets.

However, much of the recent buying activity seems to be fueled by individual investors. Critics argue that it remains uncertain whether these buyers are new to the cryptocurrency market or if they are simply transferring their bitcoin holdings from more costly products and crypto exchanges to lower-cost and user-friendly ETFs.

Since their trading debut on January 11, nine new "spot" bitcoin ETFs have attracted over $20 billion in investments, while the Grayscale Bitcoin Trust (which converted into an ETF on the same day) has experienced outflows exceeding $10 billion. Notably, the Grayscale fund carries a substantial 1.5% fee, the highest among the ten funds, compared to BlackRock's popular ETF which offers a 0.25% fee after a first-year fee waiver.

For now, registered investment advisers, who play a significant role in directing capital to ETFs, have limited access to bitcoin funds. Wealth-management platforms at Morgan Stanley, Merrill Lynch, UBS, and Wells Fargo currently offer these funds only on an unsolicited basis—advisers cannot actively promote them to clients but can provide them to those who inquire.

Economy

Its a Higher for Longer World for Interest Rates

Investors are adjusting to the prospect of prolonged high interest rates in the U.S., a scenario that they may have hoped would resolve sooner. However, this circumstance isn't necessarily negative.

Inflation has surpassed expectations slightly for the second consecutive month. According to the Labor Department's report on Tuesday, the core consumer price index, excluding food and energy prices, rose by 3.8% from the previous year in February. While this figure is down from January's 3.9%, it exceeds economists' projections for a 3.7% increase.

The data provided opportunities for both optimists and pessimists to find support for their viewpoints. While shelter cost inflation decelerated to 0.4% in February from the previous month, compared to a 0.6% pace in January, suggesting that January's high reading in that category might have been an anomaly, apparel prices, a category previously experiencing deflation, surged by 0.6%.

Stepping back and analyzing the two months of data, it appears that inflation is indeed decreasing, but at a slower rate than initially anticipated at the beginning of the year. The concern lies in the possibility that inflation might persist at a level that discourages the Federal Reserve from implementing looser monetary policies.

Politics

House Passes Bill to Ban TikTok or Force Sale of the Chinese Video App

The House overwhelmingly voted to pass a bill on Wednesday, aiming to prohibit TikTok from operating in the U.S. or mandate its sale, leading to a forthcoming debate in the Senate, where lawmakers hinted at a more cautious stance on the legislation.

With a vote of 352 to 65, alongside one member voting present, the bill displayed broad bipartisan support for taking action against the app. This move brings Congress closer to an unprecedented ban on one of the nation's most popular apps, as legislators grapple with concerns ranging from national security to freedom of speech, the implications for TikTok users and creators, and reservations about disrupting a company's business activities.

TikTok has come under scrutiny for its algorithm's role in content selection, touching on sensitive topics such as adolescent mental health and global issues like the Israel-Hamas conflict. U.S. officials argue that TikTok's ownership by a China-based entity potentially allows Beijing to gather data on Americans and shape public opinion, leading to years of on-and-off attempts to rein in the app.

Representative Mike Gallagher (R., Wis.), who co-authored the bill with the White House and Representative Raja Krishnamoorthi (D., Ill.), stated, "TikTok cannot continue to operate in the United States under its current ownership structure."

The bill now advances to the Senate, where many lawmakers share concerns similar to those of their House counterparts. However, its future is uncertain due to potential modifications to the bill's wording, ambiguity regarding leaders' stances, and internal dynamics within the Senate. When questioned about the Senate's approach to the measure, Senate Majority Leader Chuck Schumer (D., N.Y.) declined to confirm whether he would bring it up for a vote, mentioning consultation with Democratic committee chairs. President Biden has expressed willingness to sign the bill if it reaches his desk, with the White House expressing hope that the Senate will act promptly.

Tech

Microsoft to Launch AI Assistant for Security Products

Microsoft is set to introduce its artificial intelligence offering, Copilot for Security, on a global scale next month, marking its latest endeavor to fuse AI with its product lineup.

Announced on Wednesday, the company revealed that starting April 1, Copilot for Security would also be accessible through a pay-as-you-go licensing model.

According to Microsoft, this approach enables customers to swiftly initiate usage of the application and adjust usage levels as per their requirements.

In recent years, Microsoft and its competitors have allocated substantial investments towards AI, aiming to bring innovative products to market and gain a competitive advantage in this rapidly expanding field. Notably, Microsoft has made a significant $13 billion investment in OpenAI, the developer of ChatGPT, leading to a surge in its shares and cementing its position as the world's most valuable company, with a market capitalization exceeding $3 trillion.

While Microsoft's past AI ventures have elicited mixed responses, the introduction of Copilot for Microsoft 365, facilitating integration with Word, Outlook, and Teams, was considered beneficial by users, although some voiced concerns regarding its pricing.

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