Tuesday, June 6, 2023

China markets down 2%, leading losses in Asia-Pacific; Japan’s core inflation holds steady

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CNBC Pro: Bank of America or Citi? Analysts say one stock is set to soar 50%

Business leaders should not turn all decisions over to artificial intelligence: Oracle

Artificial intelligence-powered tools can aid business decisions but leaders should still hold the decision-making power, said an Oracle executive.

“We think the AI tooling will be a help to business leaders and decision makers. I don’t think the approach of turning all of your decisions over is a wise one,” said Jason Maynard, executive vice president of software firm Oracle, on CNBC’s “Squawk Box Asia” Friday.

He added that he would be “very wary” to any business out there replacing their decision makers completely with a robot.

“I think it’s a trust but verify the information coming from the systems. But I don’t think it’s going to replace the ultimate decision makers in these organizations,” said Maynard.

— Sheila Chiang

Japan central bank open to tweaking yield curve controls this year: Reuters

Japan’s central bank is “warming to the idea” of making changes to its yield curve control policy later this year, but will likely keep it unchanged at next week’s meeting, Reuters reported.

Bank of Japan governor Kazuo Ueda will chair his first policy meeting since becoming governor next week.

Reuters cited sources “familiar with the BOJ’s thinking” who said the bank’s approach would be to stay the course and make no major immediate changes to YCC and its dovish policy guidance.

However, the sources also added there may be a more “lively debate on the fate of the YCC” when the BOJ meets in June and July. There could also be scope to debate a tweak in the future, given that major firms have given big pay hikes in annual spring wage talks, the sources said.

— Lim Hui Jie

Japan’s factory activity continues contracting in April, but is offset by strong service sector

Japan manufacturing purchasing managers’ index rose to 49.5 in April from 49.2 in March, marking the slowest pace of contraction in the sector in six months. This is according to flash estimates from the au Jibun Bank.

The PMI measures factory and manufacturing activity, as viewed by purchasing managers. A number above 50 indicates expansion compared to the previous month while one below 50 signals contraction.

The flash services PMI in April was little changed at 54.9 compared to a reading of 55 in March, and is the second-highest since October 2013.

“Japan’s private sector continued to expand solidly at the start of Q2 … with a resurgent service economy helping to offset a weak manufacturing sector performance,” said Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said.

The flash composite index reading fell marginally to 52.5 in April from 52.9 in March.

— Yeo Boon Ping

Australia’s services activity expands further in April: Juno Bank

Australia’s services sector expanded in April, reaching a 10-month high on its purchasing managers index.

The country’s services PMI stood at 52.6 compared to March’s figure of 48.6, according to a private survey by Juno Bank.

Manufacturing PMI fell to 48.1 in April from 49.1 in March, signaling a second successive monthly deterioration in business conditions in the manufacturing sector.

A PMI reading above 50 indicates expansion in the sector, while a reading below 50 signals contraction.

— Lim Hui Jie

Infosys founder says he’s not worried ChatGPT will replace humans

ChatGPT is not going to replace anybody: N.R. Narayana Murthy

Nothing can beat the human mind — don’t worry too much about ChatGPT for now, says Narayana Murthy, founder of top Indian IT company Infosys.

ChatGPT, an artificial intelligence-powered chatbot, has taken the world by storm as it’s touted to perform a range of tasks including essay-writing, coding and holding human-like conversations.

“If there is a competition between you and me, you will use the ChatGPT output as your base, and then you will add your own differentiation, your own smartness, your own tweaking,” Murthy told The CNBC Conversation.

“Therefore, I am not so much worried about ChatGPT,” said Murthy. “At the end of the day, I am a great believer in the theory that the human mind is the most powerful imagination, machine. There is nothing that can beat the human mind.”

Read the full story here.

— Sheila Chiang

Japan’s March core inflation holds steady at 3.1%

Japan’s inflation rate came in at 3.2% in March, slightly lower than February’s figure of 3.3%.

This is the second straight month of slowing inflation after Japan’s headline inflation hit a 41-year high of 4.3% in January.

Core inflation, which strips out both food and energy costs, held steady at 3.1% from February.

— Lim Hui Jie

CNBC Pro: Want to invest in the A.I. boom? Veteran tech fund manager names 4 stocks to own

Artificial intelligence is no longer a futuristic fantasy but a reality transforming many industries. From chatbots to content creation, A.I. is making its presence felt in the digital space and beyond.

Ben Rogoff, portfolio manager at Polar Capital, told CNBC the current investment environment seemed like the ‘iPhone moment for the artificial intelligence technology’ sector.

The tech fund manager also told CNBC’s Pro Talks that four large-cap stocks were driving some of the biggest and most tangible advancements in artificial intelligence.

CNBC Pro subscribers can read more here.

— Ganesh Rao

CNBC Pro: UBS says this semiconductor stock is a ‘buy’ — and doubles its price target

TSMC may be an obvious pick for investors looking for exposure to Asia’s semiconductor industry, but UBS likes one of its lesser-known rivals.

Pro subscribers can read more here.

— Zavier Ong

Q1 earnings scorecard

The first-quarter earnings season has kicked into high gear. Of the 81 companies in the S&P 500 that have reported earnings to date, 76.5% reported above analyst expectations, according to Refinitiv.

Expectations are low for corporate America with stubborn inflation and recession fears. The S&P 500 companies are expected to post a decline of 6.8% for earnings this quarter, which would mark the largest earnings decline since the second quarter of 2020, according to FactSet.

— Yun Li

Fed’s Mester indicates higher interest rates likely ahead

Cleveland Federal Reserve President Loretta Mester indicated Thursday that interest rates could have a little further to rise this year and stay for for a while.

“I anticipate that monetary policy will need to move somewhat further into restrictive territory this year, with the fed funds rate moving above 5% and the real fed funds rate staying in positive territory for some time,” she said during a speech in Akron, Ohio.

“Precisely how much higher the federal funds rate will need to go from here and for how long policy will need to remain restrictive will depend on economic and financial developments,” Mester added.

With the benchmark federal funds rate is currently targeted between 4.75%-5%, Mester’s comments indicate that another hike could be on the horizon. That meshes with market pricing, which is assigning an 83% probability of a 25 basis point increase in May. However, markets also think the Fed will be cutting by the end of the year as the economy slows.

Mester added that she has seen progress on inflation but that it “remains too high.”

“We are much closer to the end of the tightening journey than the beginning, and how much further tightening is needed will depend on economic and financial developments and progress on our monetary policy goals,” she added.

—Jeff Cox

Tesla notches worst post-earnings open since 2019

Tesla shares opened Thursday about 8% lower as investors parsed the earnings report that came after the bell Wednesday. It’s the worst post-earnings open for the electric vehicle maker since the pandemic began, according to data from Bespoke Investment Group.

The stock hasn’t seen a post-earnings open drop that large since the stock was down 11.9% on July 24, 2019, data from the firm shows.

The company posted a modest beat on revenue, while earnings per share were in line with analyst expectations. But net income and GAAP earnings both tumbled more than 20% from last year.

Thursday’s open also stands in sharp contrast to the last time the company reported earnings. Shares opened up 10.8% on Jan. 25, which was the trading session following Tesla’s fourth-quarter report.

— Alex Harring

Fed’s Williams says inflation is still a problem

New York Fed President John Williams said Wednesday that inflation remains an issue for the U.S. economy, though he didn’t provide specifics on where he thinks policy should go.

“Inflation is still too high, and we will use our monetary policy tools to restore price stability,” Williams said in a speech at New York University, according to Reuters. Markets widely expect the Fed to hike rates another quarter percentage point at its next meeting, and Williams did not rebut that view.

Along with his comments on inflation, Williams noted that the banking system has “stabilized” following the tumult in March, and said he doesn’t expect the economy to tilt into recession.

— Jeff Cox

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