Morning Toast 16th May

ICE ICE baby | AI is a highway


US consumer sentiment tumbled to its lowest in 6 months in May. The drop was driven by concerns over the debt ceiling and its potential to trigger a recession. However, this deteriorating sentiment has done little to provoke a large reduction in equity exposure amongst investors. More interestingly, the CBOE Volatility Index (VIX) isn’t budging despite the debt crisis, low sentiment and inflation soup. In a wild stat that could spell danger for many overly concentrated investors.....Apple’s market cap is now greater than the value of every company in the Russell 2000 small-cap index combined - madness!

On Friday, stocks tumbled as regional banks continued to look iffy, coupled with the first titbits of data on consumer sentiment dropping, pushing the Dow and S&P 500 to their second straight weeks of losses. Despite all this, the Nasdaq lept to a weekly gain last week.

The bond market still has investors sweating with the cost of credit-default swaps, which act as insurance against a default, which is higher in the US than in emerging markets like Mexico and Brazil.

Stock Spotlight

Introducing a brand new ETF, available exclusively on Douugh and other platforms that partner with the US brokerage company, DriveWealth.

The DriveWealth ICE 100 Index ETF (CETF) is a totally unique investment approach. Each quarter the fund rebalances to invest in the top 100 best-performing US-listed ETFs from the previous quarter. This means investors instantly get access to literally thousands of investments across multiple asset classes (such as equities, fixed income and real estate) and themes (such as Bio Tech, Robotics, ESG and Finance) in one single investment.

This is a new fund designed to provide access to investments that move with the market trends (albeit one quarter behind) whilst also providing instant access to multiple asset classes and diversification in one simple investment. If that's what you’re looking for either as a novice or a pro you can check out more details here.

Past performance is not a reliable indicator of future performance. Investing involves risk and you aren't guaranteed to make money, and you might lose the money you start with. Douugh Australia Pty Ltd ABN 76 617 000 138 operates under Douugh Australia Pty Ltd AFS License No. 500063. Although we endeavour to ensure the accuracy of information we provide, we do not accept responsibility of liability for any errors or from any loss from its use. Any information provided is general advice only and has been prepared without considering your objectives, financial situation or needs. We don't provide personalised advice or recommendations. Before making any investment decision you should consider whether it is appropriate for your situation and seek appropriate taxation and legal advice. For more details, see our FSG, Terms of Service and other disclosures.

Stock Spotlight

EU Parliament proposes a ban on green claims based solely on carbon offsetting. This means companies and investment providers will no longer be able to state that they are Carbon Neutral if they use Offsets to achieve this.

A recent study by the Carbon Disclosure Project found that 40% of the world's largest companies are using carbon offsetting to achieve their climate goals.

This move has the huge potential to impact global companies operating in the EU, combatting greenwashing and, in turn, driving actual change in processes and services that are genuinely carbon neutral, not simply offset.

Quote of the Day

"AI is the highway to the future of business. If you're not on the highway, you're going to be left behind." Brian Chesky, the CEO of Airbnb

The job of this not building the highway infrastructure is to build the service layers on top that make AI useful to different customers and their different needs.

Douugh, did you know?

Through the Pandemic, American companies, big and small, were scrambling to find enough workers to stay fully staffed. With US Monetary policy starting to slow the jobs market ever so slightly, there has been a leap in people's thinking that a great layoff could be underway. Looking at the data, this may not and may never again be the case.

It remains incredibly hard to find and hire enough qualified people for the roles they're desperately trying to fill. Somehow, workers still hold power — and a massive shift that's underway in the labor market could keep it that way forever.

The shift boils down to demographics. Ever since the baby boom that followed World War II, companies have enjoyed a never-ending supply of workers to tap. Hate your job? Fine — we'll just replace you with one of the hundred others who would be happy to fill your shoes. The abundance of workers made them cheap — and disposable.

But now, those baby boomers are retiring in droves, and companies are suddenly finding themselves without an endless reserve of available bodies. "The labor shortage we're dealing with today is likely to remain this way — and perhaps get even worse," says Jay Denton, the chief analytics officer at LaborIQ, which provides salary analysis to employers. "It's going to continue to be really hard to attract people and get them into new jobs." We're entering what is shaping up to be the Forever Labor Shortage.

Where are these workers going? Over the last five years, the American workforce has not stayed static. Of the listed 22 groups, 13 saw growth in employment numbers, nine saw a decrease, and one stayed flat since 2018.

Employers are not going to take this labour scarcity lying down. So as an investor, looking at this data can be useful for targeting potential long-term growth areas that are going to expand, seek more capital and deliver returns. Likewise, it can highlight these industries at risk. 

Questions about the future of the American workforce loom large, especially in the wake of the AI revolution that has swept imaginations and, quite possibly, soon the economy. People who hold administrative jobs—the largest category—are most vulnerable since many office tasks can be automated with increasingly sophisticated AI tools.

Will AI be as dominating a factor as the Industrial Revolution on the global economy? Will it cause as big a shift as the offshoring of manufacturing from the US?

Or will AI blend seamlessly into the current makeup of the American workforce, merely enhancing productivity and profit?

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