What’s Love Got To Do With It?
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Hi there!
Love is in the air, but unfortunately so are mysterious surveillance balloons. Worsening US-China relations put a damper on markets at the start of the week, but artificial intelligence was a bright spot. After Microsoft-backed ChatGPT revealed its potential to disrupt industries and change the way you search, investors have been buying up shares in AI-related companies. China’s search giant Baidu jumped after it announced its own chatbot project. Could this be the latest stock craze and gimmick, like when mere mentions of crypto or marijuana sent prices soaring? We’ll have to wait and see, but it helps to use your own intelligence and be careful during any buying frenzy.
Grammy acceptance speeches are still trending, but two other speeches on Tuesday had investors’ attention. President Biden said he wants to put the brakes on stock buybacks by quadrupling the new 1% tax on them. This practice, which sees companies use profits to repurchase their own shares, is an investor-pleaser, and corporate America spent a record $1.2 trillion on it last year.
But opponents of these payouts believe the money should be invested in employees, physical assets, innovation, and the products and services that drive revenue at these companies. They argue irresponsible buyback spending can sacrifice long-term value and leave firms vulnerable during crises, as we saw with the airline industry. Now, Biden’s proposal is unlikely to be passed in Congress, but it could be a sign of things to come. Experts say companies may raise dividends in such a scenario.
Meanwhile, at The Economic Club of Washington, DC, Fed Chair Powell’s words on easing inflation cheered investors hoping for slower interest rate hikes, but this optimism quickly waned when they remembered that he also said that strong economic data, like January’s job report, would be met with more aggressive tightening than is expected now. Click here to learn how interest rates and inflation are linked.
Finally, our thoughts are with the people of Turkey and Syria this week. If you’re looking to help, The New York Times has assembled a list of charities responding to the tragedy and accepting donations.
Asking for a friend….
We know there is a lot to think about these days, and it can sometimes be a bit overwhelming. To help with those nagging questions and so you have useful resources at your fingertips, here are few links to resources and past stories relevant in these turbulent times:
- FWIW’s Guide to Long-Term Investing
- Some of our favorite inflation-fighting strategies (and a few more)
- How to Research ESG Funds and Stocks
- FWIW Guide to Cleantech Investing: Sectors to Watch (covering a dozen innovative sectors to anchor your research on sustainable investing options)
- How to Practice Faith-Based Investing
- “Siri, What Is a Recession?”
News you can use
- The egg shortage making our breakfast and brunch orders pricier than ever has one beneficiary: vegan eggs. Sales of liquid plant-based eggs were up at the end of 2022 as they became cheaper than chicken eggs. The biggest player ran “Plants Don’t Get Flu” ads, and an animal-free egg maker has announced Anne Hathway as an investor. This egg-spensive situation, blamed on inflation and avian influenza, has also sparked interest in backyard chickens and egg smuggling, raised questions about the risks of factory farms, and led to accusations of price gouging.
- Despite more consumer awareness and regulations, single-use plastic waste rose to a record 139 million tons in 2021, according to the Minderoo Foundation. For investors looking to divest or engage with the biggest contributors, the Australian non-profit has ranked petrochemical companies by waste footprint and emissions. The good news is that the industry seems to be “taking circularity more seriously,” and eight companies, including Dow, have set 2030 targets to use recycled polymer in at least 20% of their production.
- A district judge has allowed construction to start on the largest lithium mine in North America. Opposed by Native American tribes and environmental activists, Lithium Americas’ Thacker Pass project in Nevada is an example of the dilemmas facing sustainable investors. General Motors has invested $650 million in the mine, which is said to hold enough metal for the production of one million electric vehicles a year. The car maker and Netflix are planning for more EV representation on screen and roped in Will Ferrell for their new Super Bowl commercial.
