The Rundown - Amazon Highlights AI in Shareholder Letter, Rate Cuts in Limbo After CPI Data

Starting point is 00:00:00 Public.com presents the rundown, your daily market update in five minutes. My name is Zadmani, and today is Thursday, April 11th. In today's episode, we talk about the hot inflation report that's sending shockwaves across the market, and if it might be an overreaction. Also, we dive into Amazon and Microsoft's plan to step up their AI efforts. Then stick around to the end of the show to learn about how much money the Masters makes just from their merch. It's truly a shocking number.

Starting point is 00:00:27 All right, let's get into it. Well, guys, yesterday was one of the worst days for the stock market this year. In fact, it was so bad that it literally made me sick. I came down with a cold yesterday, so I apologize that my voice sounds a little weird today. The hot inflation report on Wednesday morning freaked out investors in all three major indices were down on Wednesday. And the 10-year treasury yield also jumped to above 4.5%. I think investors are pretty concerned that the Fed might not cut rates at all this year.

Starting point is 00:00:55 According to the CME Fed Watch tool, the odds of a June cut went from 50% down to 16% yesterday, and many analysts don't think the Fed will cut rates until December. The March CPI data was the third month in a row that inflation came in hotter than expected. So it's not just one data point. There seems to be a pattern that inflation is creeping back up. And if inflation doesn't show signs of getting closer to the Fed's 2% target, the Fed has no reason to cut rates, especially if the job market continues to stay hot. I mean, it's possible that this is all an overreaction by the market, because the producer price index report just came out this morning,

Starting point is 00:01:29 which measures wholesale prices, and it was up 0.2% for the month, which is less than what economists were expecting. So today's data shows that inflation is trending lower. Going to be interesting to see how the markets react to that news today. Make sure you guys tune in tomorrow to get an update. By the way, not all stocks had a bad day yesterday. Invidia was one of the 15 stocks in the NASDAQ 100 that didn't drop on Wednesday. Earlier this week, Nvidia's stock was down more than 10% from its all-time highs, and we put out a Spotify poll yesterday asking if you guys would buy the dip, and 71% of you guys said that you were planning to buy the dip or thinking about buying the dip. Well, if you bought yesterday, you're probably feeling pretty good right now. All right, let's run through some headlines.

Starting point is 00:02:06 Amazon CEO, Andy Jassy, released this 2024 annual shareholder letter this morning. And my biggest takeaway from this letter is that Amazon's going to continue to focus on cost cutting and invest in AI. Very original Amazon. Let's start with the cost cutting part first. Amazon sees cost cutting opportunities within its inbound fulfillment centers and inventory placements. I mean, Amazon's already had a ton of layoffs over the last year. They cut more than 27,000, and jobs in 2023 and shut down a ton of unprofitable departments and projects. On top of further cost cutting, CEO Andy Jassy says their next pillar of growth is going to be AI. Amazon is building an AI shopping assistant called Rufus. It's going to live on the website

Starting point is 00:02:42 and it's slowly being rolled out to more and more customers. Amazon also plans to improve Alexa. Amazon's going to try to make Alexa more intelligent through the use of AI. We'll see how that pans out. I mean, because the only thing I use Alexa for is to set timers. Amazon's other AI plans include tools for advertising and a deeper AI integration into the AWS cloud product. So we'll see how it goes. By the way, Andy Jassy has now been the CEO of Amazon for three years now. He took over from Jeff Bezos back in 2021. And Amazon stock is hitting all-time highs right now. Sticking with the AI theme, Microsoft plans to reveal its upcoming plans for AI at its build conference in May. The rumor is the company is going to reveal their AI tools related to its PCs and its cloud

Starting point is 00:03:21 product Azure. Microsoft's been probably the biggest winner of this whole AI boom lately. And there's a lot of anticipation building about what Microsoft's next steps are going to be. Remember, Microsoft hired a new head of AI in March. Mustafa Suleiman, who was the co-founder of DeepMind, which was an AI company sold to Google back in 2014. So this guy's been in the AI game since the very beginning. And Suleiman's now in charge of AI at Microsoft, and he's going to oversee products like Microsoft's co-pilot chat box and AI integration into Bing. We'll see what Microsoft reveals at their build conference in May. All right, let's talk about some stocks making moves today. Nike's stock is up more than 2% this morning after Bank of America upgraded the stock to a buy rating with a price

Starting point is 00:03:59 target of $113. Bank of America expects the company to put more efforts into innovation and continuing to cut costs by around $2 billion over the next three years. Right now the stock currently trades around $90 per share. On the flip side, CarMax stock is down this morning. The stock for this used car seller is down more than 6% this morning after they missed on earnings. CarMax's revenue and net income in Q1 both drop compared to last. year. Investors didn't like the sound of that. CarMax blamed the volatility in the car market for the drop in sales. All right, let's wrap the show with a fun fact. Today's fun fact is about the Masters Golf Tournament, which kicks off today. This is a pretty big week for all my golf fans out there,

Starting point is 00:04:39 but I want to talk about how much money the Masters makes and how much money they're leaving on the table. According to Forbes, the Masters sells about $1 million of merch every hour during the tournament or about $70 million in merch sales during the week of the tournament. See, you can't buy any Masters merch outside of the tournament. They only sell it on the grounds during the week of the tournament. So the estimated 40,000 fans or patrons, like the Masters like to call it, try to buy as much Masters merch as they can while they're there. But while the Masters makes a ton of money from selling all their merch, they're probably leaving a lot of money on the table as well. The food prices at the concessions are extremely reasonable. You can get a Pimento

Starting point is 00:05:19 cheese sandwich for $1.50, a chicken sandwich for $3 and a coffee for $2.00. Those sound like prices for my 2005. I mean, seriously, it's incredible, especially given the fact that this is at a sporting event where prices are almost always extremely high. The last time I went to a sporting event, I paid $15 for some stale nachos. Also, the Masters broadcast doesn't have a lot of commercials. There's about four minutes of commercials for every hour of broadcasts. And the commercials during the Masters are only from a limited number of partners. Like this year, it's going to be IBM, AT&T and Mercedes. So the food prices and limited commercials is a lot of money that the master's just leaving on the table. I think that's one of the reasons why people really like

Starting point is 00:05:57 tuning in. I mean, the soothing sounds of the birds from the broadcast with very limited commercials makes for perfect background noise throughout the day and for a midday nap as well. I'm not a big golf guy, but I definitely want to go to the Masters one day. It's on my bucket list for sure. All right, guys. Well, that's all I got for you guys today. Hope you guys enjoyed today's show. Shout out to Mike and Connor for all the work behind the scenes. Thank you guys again for listening and we'll see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in this show reflect the opinions of the guests.

Starting point is 00:06:27 You should not take any mention of a publicly traded security as recommendation to buy, sell, or hold that security. Run-down guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult, respective professionals. Learn more at public.com disclosures. In partnership with Zaid Admani, brokerage services for U.S. listed. registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.

The Rundown - Amazon Highlights AI in Shareholder Letter, Rate Cuts in Limbo After CPI Data

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