May Inflation Rise
The personal consumption expenditures price index (PCE), the Federal Reserve’s primary price gauge, rose to its highest level since 2023, reinforcing the central bank’s recent tough talk on inflation. The “all items” PCE rose at a seasonally adjusted 4.1% annual rate, the highest since April 2023. Excluding food and energy, the PCE rose 3.4%. Both numbers were in line with expectations but highlight the fears of higher future inflation reports as the energy price shock works its way through the economy.
Source: Wall Street Journal
Chips and Apples
Today, Apple announced price increases on Macs and iPads due to the soaring costs of memory and storage chips. A base model of the MacBook Pro, for example, now costs $1,999, up from $1,699. Apple’s entry-level laptop, the MacBook Neo, now costs $699, $100 higher than when it was unveiled in March. The price of an iPad Air increased $150 to $749, while the price of an iPad Pro jumped $200 to $1,199. You can blame the insatiable appetite of the AI data center boom.
Source: New York Times
Will Pure AI Companies Ever Make a Profit?
I asked Claude.ai if AI companies would ever be profitable. The answer made a distinction between “Frontier Model Labs”, those who are building core AI brains, and big tech who are embedding AI everywhere. Anthropic is the frontier model lab company behind Claude.ai and confidentially filed for an IPO this month. The answer came back, highlighting that frontier model labs are the riskiest bet given the enormous costs of continuing to advance their models. Those who are embedding AI everywhere are better bets. I guess Claude.ai is not that confident its creators will ever be profitable.
Source: Claude.ai
If Your Company Offers a 401K – Enroll in It
If you have the option to enroll in your employer’s 401K plan, you should seriously consider it. Some may not have the cash flow flexibility to do so, but do try to find a way to make it work. Almost half of private-sector employees ages 18 to 64, or about 57 million Americans, don’t participate in a retirement plan at work, according to the National Institute on Retirement Security, a Washington-based research organization. Yes, Social Security provides a financial foundation in retirement. But steady payroll deductions—month after month, year after year, starting as early as possible—are essential to building a nest egg.
Source: Wall Street Journal
AI vs Experience
Ford Motors has hired 350 experienced engineers, many former employees, after artificial intelligence and automated systems failed to deliver the desired quality level. Charles Poon, Ford’s vice president of vehicle hardware engineering, added, “Mistakenly we thought that by just introducing artificial intelligence and ingesting the design requirements that we had, that that would produce a high-quality product.”
Source: Bloomberg
Funflation
As the COVID pandemic started to wane, “funflation” bloomed as venues reopened following months of closures driven by fear of the virus, which canceled tours, forced sports leagues to play games in front of empty seats and hammered restaurants and movie theaters. Once live music, theater and sports returned, vaccines proliferated, and public health restrictions eased, people rushed back to be entertained in big crowds. Baby boomers, many flush with cash from the strong stock market, led the charge into concert tourism – traveling across state or international borders for a unique experience. For example, the #4 touring act this year is AC/DC. I saw AC/DC for the first time 47 years ago, just to put it in perspective.
Source: Wall Street Journal
