Wall Street has spoken - now ChatGPT identifies the biggest wildcards for markets next year

MW Wall Street has spoken - now ChatGPT identifies the biggest wildcards for markets next year

By Steve Goldstein

There's a lot of common ground between AI and the humans

By now pretty much every firm has weighed in on what they expect in markets next year (all but one: solid but less spectacular stock-market gains).

But a special credit goes to the team that put together the macro outlook at Nomura, which not only identified what it perceived to be the tail risks - that is, surprises in either direction - for markets in 2025 but also asked ChatGPT to do so. You can look at the two side-by-side. And for the really curious, MarketWatch went and asked other AI engines (and got fairly similar results) - here's what Gemini and Command-R have to say.

There's a lot of common ground between AI and the humans, as they both brought geopolitics, cyber security, debt concerns, and tech issues to the fore. Perhaps because of recency bias, ChatGPT is fearful of what COVID brought - the pandemic itself and the related supply-chain disruptions. The Nomura team captures more Trump 2.0 concerns: trade wars, Fed hikes, possible loss of Fed independence.

The Nomura team puts both AI bust and boom as tail risks, which does feel about right. One added AI concern, not addressed by either robot or human here, is the scaling trouble that the chatbots of late have encountered - they aren't getting smarter with more firepower.

It's also noticeable how they looked at energy in completely different ways - ChatGPT is fearful of supply shock, while the Nomura team fears a glut.

The markets

Stock-market futures (ES00) (NQ00) edged higher. Bitcoin (BTCUSD) cooled a little after reaching over $106,000 during the weekend.

   Key asset performance                                                Last       5d      1m     YTD     1y 
   S&P 500                                                              6051.09    -0.64%  3.07%  26.86%  28.22% 
   Nasdaq Composite                                                     19,926.72  0.34%   6.67%  32.74%  34.51% 
   10-year Treasury                                                     4.387      18.40   -3.40  50.61   44.81 
   Gold                                                                 2678.4     -0.17%  2.38%  29.28%  31.22% 
   Oil                                                                  70.54      3.51%   2.11%  -1.11%  -3.22% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Axon Enterprise $(AXON)$, Palantir Technologies $(PLTR)$, and somewhat controversially MicroStrategy $(MSTR.AU)$ are joining the Nasdaq 100, replacing Illimuna $(ILMN)$, Super Micro Computer $(SMCI)$ and Moderna $(MRNA)$. Super Micro hired Evercore to raise capital, according to a Bloomberg report.

Honeywell International $(HON)$ says it's now considering separating out its aerospace business, a move that won the backing of activist investor Elliott Investment Management.

The economics calendar includes the Empire State manufacturing index and flash manufacturing and services PMI. Chinese retail sales came in below expectations.

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The chart

It looks like wages might be heating up - from JPMorgan, this chart plots the compensation plan subcomponent of the National Federation of Independent Business small-business optimism index - moved ahead by six months - with that of the Atlanta Fed wage growth tracker. The firm's market intelligence group is bullish on stocks but says a scenario of of higher rates and lower equities should be hedged.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   MSTR    MicroStrategy 
   PLTR    Palantir Technologies 
   GME     GameStop 
   SMCI    Super Micro Computer 
   AVGO    Broadcom 
   TSM     Taiwan Semiconductor Manufacturing 
   AMZN    Amazon.com 
   AMD     Advanced Micro Devices 

Random reads

Orcas have resumed their 1980s habit of wearing dead salmon on their heads like hats.

Mysterious googly eyes have been appearing on public art in Oregon.

Changing times - the over-24s are now allowed to compete in the Miss France competition, as the Netherlands scraps their event.

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-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

December 16, 2024 06:42 ET (11:42 GMT)

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