Chris Jones, Trader, presents our June video market update and shares what FSA is doing to respond.
June 2023 Stock Market Update Transcript
Hi, my name’s Chris Jones, and here’s your June 2023 market update.
Legislators were able to strike up a bipartisan deal just under the wire to spend the debt limit through early 2025. This takes the risk of default off the table until after the next presidential election.
In this bill there are cuts to spending but not defense. Defense will rise $886 dollars this year. With President Biden officially declaring the COVID-19 public health emergency over in early May, this bill includes a provision to return any unspent COVID relief funds. The Congressional Budget Office estimates that this will amount to around $30 billion.
The S&P 500 has been in a narrow trading range since early November 2022. Narrow trading range can be indicative of market consolidation and investors waiting for a catalyst that can make a directional move in the markets. At the end of May, the S&P finally broke past the 4,200 mark, which was the upper bound of the trading range. This in thanks was to gains in the technology sector.
The rallying in the tech sector has been driven in part by advancements in artificial intelligence. AI is fun, new, and exciting, but we are remaining prudent in our allocations to investments with exposure to AI.
This is a chart of the technology benchmark. To the right of the yellow line is the period from May 17 to June 5, and it has clearly broken out well above its hundred-day moving average, which is the thin blue line you see, indicating that investors see the sector as bullish. Graphic chips are the lifeblood of these AI systems. The only issue is demand is far outpacing supply. A startup CEO has recently compared a shortage of chips to that of toilet paper during the pandemic. UBS analysts estimate that the first iteration of ChatGPT used around 10,000 of these chips. Elon Musk has come out to state that the current iteration of ChatGPT uses three to five times that amount.
While tech stocks have clearly broken into a new uptrend, that is not the same for the rest of the market. While large-cap technology stocks have clearly broken into a new uptrend, this is not true for the rest of the market. We will always follow the trend and continue to push the portfolios into deeper waters and equities while the market continues to push along.
As always, please inform your advisor of any changes in your life that may affect your investment objectives.
This has been Chris Jones. Thank you for watching this month’s video market update.
FSA’s current written Disclosure Brochure and Privacy Notice discussing our current advisory services and fees is available at www.FSAinvest.com/disclosures or by calling 301-949-7300.
