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Friday Predictive Charts

Risk assets were lower and bond yields were higher this week as evidence of resurgent inflation continued to mount: Caitlin Clark is bringing eight-figure sponsorship deals to women’s sports; FedEx will be paying college athletes $10s of millions; high school athletes think they, too, need to be paid; Big Bird and his pals are on strike until they’re paid more; Elon is asking shareholders to approve his $56 billion payday; and the price of forever stamps is going up.

The biggest news of the week, however, was promisingly deflationary: Meta released Llama3, its large-language model trained on 15 trillion tokens (units of text) using a custom-built cluster of 24,000 GPUs.

The most astounding metric, however, is its cost to use: $0.

Llama3 is open source and therefore free for the world’s current and would-be builders to build with.

It’s too early to venture any predictions as to what kind of building that will enable, but it’s easy to predict that it will enable a lot more of it.

In the long term, that should prove to be radically deflationary.

The AI story might get surprisingly deflationary in the short term, too: Mark Zuckerberg noted this week that the severe shortage of GPUs is "sort of getting less."

That may not sound like much, but the semiconductor industry is famous for progressing from severe undersupply to severe oversupply with shocking speed. Zuckerberg’s comment might be the first hint that we are nearing that tipping point.

If so, it would be great news for the builders who need access to the GPUs they need to build things for us.

For the market, however, this would probably not be great news. 

The S&P 500 has been riding the wave of demand for GPUs. If that demand is about to crest and then possibly crash, equities might crest and crash right along with it.

That’s probably not why equities wobbled this week — there are lots of more tangible reasons why the market might be heading lower, as concisely enumerated here.

Unfortunately, AI is not quite cheap, ubiquitous or intelligent enough to predict that for us just yet — although a looming surplus of GPUs may so deflate the cost of AI that we’ll be there sooner than anyone thinks.

In the meantime, we’ll have to stay on top of all these inflation, deflation and macro things the old-fashioned way.

Let’s check the charts.

AI isn’t taking all the jobs:

An 18-month downturn in white-collar employment has ended, according to Conor Sen. The wave of tech-sector layoffs appears to have been a normal cyclical correction and not a structural trend of AI making humans redundant. 

One is enough:

The pay differential between people with graduate or professional degrees and those with undergraduate degrees is at the lowest level on record. This may be contributing to the "vibecession," according to @econberger, because the more educated you are, the more likely you are to be complaining about things on Twitter. (Maybe.)

Don’t get a zookeeper degree:

The lowest-rated occupation on Glassdoor is zookeeper, with other animal-related jobs not far behind. Fortunately, AI robots should soon be cleaning the monkey cages and walking the dogs for us.

No degree at all is a better option than ever:

At just 4.9%, the unemployment rate for those without a high school diploma remains near all-time lows.

Ready to work, kids?

The number of Gen-Z Zoomers working full-time is about to pass the number of baby boomers working full-time — and they’re making more money, faster. "Generation Z is unprecedentedly rich," according to this week’s Economist.

But not house rich:

The only thing Gen Z is behind the curve on is home ownership, according to John Burns Research and Consulting — only 18% of US Zoomers have chosen mortgages over living with parents or roommates.

Come to America:

The best way to get a raise may be to get a job in the US. OECD data shows US wages accelerating while wages in the rest of the developed world stagnate. Americans are getting so rich, in fact, that they think a $400,000 income is still middle class.

That sounds pretty good to me — and I don’t need an AI model to predict that things will soon be sounding even better.

Have a great weekend, predictive readers.

― Byron Gilliam

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Does The Bitcoin Halving Still Matter?

This week we discuss the current state of crypto after the weekend flash crash. As Bitcoin struggles to break $70,000 with conviction, will the 2024 halving be a strong catalyst for more bullish price action going forward?

Watch or listen to 1000x on YouTube, Spotify or Apple.

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