TradeUP Thursday
July 27, 2023
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• How does the Fed’s data-driven approach impact economic decisions?
• How are Google and Microsoft committing to responsible AI development?
• What contributed to Meta’s shares surging nearly 10%? 
Dow Jones S&P 500 Nasdaq
35,582.85 (+0.18%) 4,600.16 (+0.73%) 14,127.28 (-0.12%)
Opening price as of 07/27/2023 compared to last close
Federal Reserve approves 22-year high rate hike, stated no recession forecast ahead
The Federal Reserve approved a quarter percentage point rate increase, setting the target range at 5.25%-5.5%. Speculation rises on no further hikes. Powell emphasizes data-driven decisions in unanimous post-meeting approval. Focus remains on economic growth, inflation, and job gains. Aggressive rate increases respond to economic conditions, and quantitative tightening continues. Read more

AI takes center stage in Google and Microsoft earnings calls
Google and Microsoft’s recent earnings calls highlighted their focus on AI technologies. Google introduced the Search Generative Experience (SGE) using AI to improve search results and launched the Bard chatbot and Google Lens capabilities. Microsoft discussed success with Azure OpenAI, integrating ChatGPT into various systems. Both companies endorse voluntary guidelines for responsible AI development and have seen significant stock growth. Their commitment to AI aims to enhance user experiences and drive innovation. Read more

Meta sees ad revenue jump, tops Wall Street targets
Meta’s shares surged nearly 10% as a positive revenue forecast showcased the role of AI in boosting engagement and ad sales. The company’s second-quarter earnings exceeded expectations, prompting analysts to raise their target price. Meta’s 12% growth in ad revenue outpaced Google’s 3%, signaling a sector recovery. Monetization of Reels and AI-powered campaign planning contributed to the success. The company’s focus on cost-cutting and AI-driven engagement has made it a favored stock on Wall Street. Despite concerns about future expenses, Meta’s accelerating revenue growth has investors optimistic about its potential. Read more

How to Position Your Portfolio to Weather a Potential Recession?

Inflation continues to concern both individuals and the market. The Federal Reserve has combated this with a substantial rate hike, aiming to control inflation and maintain a low unemployment rate. Despite these aggressive measures, the U.S. economy has proven resilient, showing no signs of an anticipated recession. The inversion degree between two-year and ten-year U.S. Treasury yields is traditionally an indicator of upcoming recessions, but it has not worked so far in this cycle. The absence of a recession, despite significant rate hikes, is due to several factors: a robust job market, the effects of government fiscal stimulus during the pandemic, and moderate consumer debt. However, given the persisting high inflation, the Federal Reserve’s inability to manage interest rates’ degree and speed effectively, and the inevitable cyclicality of economic decision-making, the U.S. may soon face a recession. To mitigate this, strategic adjustments to asset allocation might be preferred, reducing stock exposure and moderately increasing bond exposure. Read more on our blog


Account Types

Cash Account:  In a cash account, all transactions must be paid in full with available cash or investments; no credit is permitted. When using an existing investment position to finance a transaction, the investor must be able to sell it that same day in order for the necessary cash to become available.

Margin Account: In a margin account, investors can borrow up to 50% of the cost of securities they wish to purchase from their brokerage firm in a process referred to as buying on margin. Investors are charged interest on the account loan which accrues on a monthly basis, and the loan must be paid off when the securities are sold. The idea behind margin accounts is to use increased purchasing power to purchase securities that will increase in value faster than the loan interest. However, there’s also a greater potential for large losses when using credit. Margin accounts are thus much riskier than cash accounts and come with additional requirements for both the investor and the FINRA member firm.

Options Account: Broker-dealers are required to formally approve investors for options trading by having them complete an options agreement, which will assess the investor’s general investing knowledge as well as their knowledge of options, trading strategies, and the risks associated with options transactions. They may also need to provide information such as investment objectives, trading experience, and personal financial details. In addition to the options agreement, broker-dealers are required to furnish all potential options investors with certain disclosures. Once approved, the broker-dealer will decide which option trading level the investor qualifies for (typically one of five levels varying in risk).

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