🎙️ Under Pressure

📰 Extra! Extra! Read all about it!

This century? Not so much. The newspaper industry hasn’t had an easy road since the internet boom of the late 1990s. Print circulation and employment numbers in the space have plummeted over the past two decades, with only a handful of healthy subscription businesses like The New York Times and The Wall Street Journal emerging victorious.

Even digitally-native brands, including BuzzFeed, Vice, and Vox, have struggled to carve out an audience in the competitive media landscape. Our Chart of the Day below encapsulates the news market’s tough sledding.

Fortunately, newsletters like ours have you covered daily on all things markets. We appreciate you following along 📈

—Matthew 

Here’s the rundown:

Today, we'll discuss the three biggest stories in markets:

• Why everyone wants a piece of the new bull market

• Aston Martin seeks support

• A.I.’s path in medicine from paperwork to lifesaver?

All this, and more, in just 5 minutes to read.

CHART OF THE DAY

IN THE NEWS

📈 Traders Believe the Bull Market Is Just Beginning (WSJ)

It’s not 2020 and 2021, but optimism is emerging in the stock market.

Big tech’s hot rally to kick off the first half of 2023 has many investors and traders betting that we’re in a new bull market. After 2022’s carnage across stocks, crypto, bonds, and elsewhere, it’s a welcome reprieve for many investors.

We entered the year with still-persistent inflation and the most bearish outlooks Wall Street has seen in decades. But A.I. became a buzzword again, and the tech-heavy Nasdaq has soared roughly 30% in 2023, on track for its best start to a year since 1983. The S&P 500 has rallied about 13%, as investors are counting on artificial intelligence stocks and technology to carry the load.

More than 1.3 million call contracts changed hands on an average day in June for chipmaker Nvidia, whose stock has soared since last fall. A call option, or a “call,” is a contract between a buyer and seller of a call option to exchange a stock at a set price. And the data represents just how bullish investors remain on stocks like Nvidia.

The call contract volumes surpass the euphoria of November 2021, when the Nasdaq peaked after soaring from the March 2020 low. There’s also been record activity tied to S&P 500 index options, with one-day trading in calls surging.

It’s a sign of enthusiasm and FOMO.

“Fear of missing out is back,” one managing partner noted.

Why it matters:

Some traders argue the euphoria is a short-term signal that stocks are headed lower. That might happen. But it’s worth noting what Great Depression-era economist John Maynard Keynes said: “Markets can remain irrational longer than you can remain solvent.”

It means that markets can do anything in the short run (or even the medium run). FOMO can build on FOMO to push stocks higher and higher. It can also be the same on the way down, as stocks tend to overreact in both directions in the short run.

Either way, this year’s rally caught many traders offside and burned traders who shorted – those who bet stocks would fall – the market. The economy has held up better than expected, the jobs market has been less sensitive to rising rates, and inflation has cooled.

Hop on the train: “A lot of people are coming around to the view that the stock market may have already bottomed last fall,” said RBC Capital Markets’ head of derivatives strategy. “If you started the year bearish, you’ve been really under-allocated. Investors are looking at a market that’s rallied 14% and, almost not by choice, they feel the need to hop on the train.”

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🚗 Aston Martin Strikes Deal With U.S. EV Company Lucid (Reuters)

British Luxury carmaker Aston Martin has struck a deal with U.S. electric vehicle (EV) manufacturer Lucid Group.

Lucid will receive a 3.7% stake in Aston Martin to access its "high-performance" technology. Aston Martin will provide cash payments and issue about 28.4 million new ordinary shares (also called “common stock) to Lucid, valued at around $232 million.

• The shift to electric vehicles carries big costs: Global car manufacturers are deploying roughly $1.2 trillion to low-emission technology. Smaller automakers like Aston Martin rely heavily on partnerships to facilitate the transition to be greener (and reduce costs over time).

Aston Martin, which had relied on Mercedes for technology support, is charting its path in the EV realm with plans to launch its first EV in 2025.

• In a separate announcement, Aston Martin revealed its agreement with Mercedes-Benz had been modified. Rather than increasing its stake, Mercedes-Benz will maintain its current 9% stake in Aston Martin and continue to grant access to the engine and EV technology.
  

• Through the agreement, Aston Martin will access Lucid's cutting-edge technology for battery electric vehicles (BEVs), encompassing electric powertrains and battery systems.

Notably, Lucid and Aston Martin share a common shareholder in Saudi Arabia's Public Investment Fund (PIF), while the Saudi wealth fund became Aston Martin's second-largest shareholder.

• PIF also serves as the primary shareholder of Lucid. It also played a major role by providing the majority of funds for a $3 billion stock offering by the U.S. EV maker.

  

Why it matters:

Amid recession concerns and intense competition fueled by Tesla, Lucid and its counterparts face the challenge of mounting losses and limited cash reserves. The additional funds are crucial for Lucid.

• Last month, the company revised its 2023 production forecast and reported lower-than-anticipated revenue for the first quarter.

Aston Martin, a luxury brand favored as James Bond's iconic escape vehicle, has built a global fanbase with its elegant, powerful, and stylish cars. But the company's corporate journey, with 110 years of history, has been far from seamless: Aston Martin has navigated through seven bankruptcies.

• There was the catastrophic IPO in 2018 when its trading debut flopped as shares fell after opening. Then it faced more headwinds.
  

• The company's shares plummeted as investors grew skeptical about its ability to effectively manage its substantial debt while introducing its inaugural SUV and the high-priced Valkyrie hypercar.

MORE HEADLINES

🔊 Biden announces $42 billion high-speed internet initiative

⛽ Oil and natural gas prices rise after weekend of turmoil in Russia

🏢 Rent prices in the U.S. fall for the first time in three years

🩺 A.I. Could Work Medical Miracles. Now? Paperwork (NYT)

You might have seen the A.I. headlines – who hasn’t? – about how, in a few years, A.I. might be working medical miracles. It might detect cancers or other issues early. It could treat illnesses quicker. It could allow doctors and nurses to allocate their time and resources better. These could all be extraordinary developments.

But for now, A.I. does paperwork.

The best use of generative A.I. in healthcare is to ease the burden of documentation that can take doctors hours a day, contributing to burnout.

One Tennessee-based doctor said he used to spend around two hours typing up medical notes after his children fell asleep at night. “That’s a thing of the past. It’s quite awesome,” he said. Now, he uses an A.I. “helper” that records patient visits on his smartphone and summarizes them for treatment plans and billing. He lightly edits what A.I. produces. He’s done with daily patient visit documentation in about 20 minutes.

The ChatGPT version of A.I. for healthcare could give every doctor a superintelligent assistant, dispensing suggestions to improve care. It’s unlikely to replace a human doctor, but A.I. could amplify the skills and techniques of a trained doctor.

One way A.I. could improve a doctor’s workflow, bandwidth, and schedule is: Take care of the mundane paperwork that creates busy work (and, sometimes, fatigue) for doctors who’d much rather focus on caring for patients, not doing administrative work.

Said Dr. John Halamka, president of Mayo Clinic Platform: “At this stage, we have to pick our use cases carefully. Reducing the documentation burden would be a huge win on its own.”

Why it matters:

Time saver: Doctors and nurses are facing burnout, driving some out of the profession altogether. But another doctor in Pennsylvania said new software has freed up nearly two hours in her day, a time she’s now using for yoga and family dinners. Could A.I. handle “admin,” reduce stress, and reduce turnover in the industry?

Another benefit is that doctors can be more present with their patients, not stuck in note-taking or other distractions. Some doctors have asked permission to record their conversations, which A.I. summarizes. After a visit, the patient receives the summary through a secure online portal.

“A.I. has allowed me, as a physician, to be 100% present for my patients,” one doctor noted.

Studies have shown that patients forget up to 80% of what physicians and nurses say during visits. An A.I.-generated summary of the visit could reduce that problem.

“That has really helped me build trust in the A.I.,” the doctor said.

See you next time!

That's it for today on We Study Markets!

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