Zuckerberg Rejects AI Slowdown, Fed Expected to Start Hiking Cycle

Zaid Admani (0:00)

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Wednesday, September 16th. In today's episode, we'll break down why the Fed is expected to raise interest rates for the first time since 2023 We'll also tell you why Mark Zuckerberg and Jensen Huang are pushing back against calls to slow down AI. Then stick around to the end of the show to find out why malls have been the best performing sector in commercial real estate. We got a great show for you today.

Let's go.

Stocks took another hit on Tuesday with the S&P 500 dropping half a percent, while the NASDAQ fell by 0.8%.

The stock market is in a bit of a funk right now. It's dropped for six out of the last seven trading sessions as investors get more nervous about bond yields and oil prices and what the Fed is going to do today. The 10-year treasury yield touched 5.04% yesterday before closing right under 5%, but that was still the highest close since July of 2007 The 30-year treasury yield is trading around 5.36%. Oil prices continued to jump yesterday. Brent crude is now trading near $108 a barrel because of supply disruption in the Middle East. And that's pushing up the cost of pumping gas at the pump. The national average in the US is near $4.33 a gallon. And as gas prices keep climbing, that's hurting other sectors of the economy. We're already starting to see data that higher gas prices and borrowing costs are hitting discretionary spending. For example, restaurant traffic dropped 2.4% from last August and stocks like Wingstop, Kava and Cheesecake Factory all fell more than 4% yesterday. And that brings me to the Fed meeting today. At 2 p.m. Eastern time today, the market is pricing in a 90% chance the Fed will announce a 25 basis point hike. This will be the first time the Fed has hiked interest rates since 2023 And the reason the market is expecting a rate hike is because of rising inflation. Now, as you guys know, the reason inflation is going up is because of energy prices going up from the supply shock from the Iran War. But hiking interest rates isn't going to fix the oil supply issue. But what the Fed is hoping to do is that by raising rates, that's going to slow down consumer demand and stop the oil shock from spreading to the rest of the economy, so that expensive oil doesn't turn into everything else getting expensive. So that's why the market is convinced the Fed will be hiking rates today. And I think the key question coming out of this Fed meeting is that will this just be a one-time hike or the start of another hiking cycle? Looking back in history, the Fed has only done a one-and-done rate hike once, which was back in 1997 Usually the Fed likes to do multiple rate hikes. So I think that will be the key thing to listen to during Kevin Warsh's press conference today. Will he hint at more rate hikes moving forward? The bond market definitely thinks so. Markets are pricing in roughly one more rate hike by the end of this year, with potentially several more rate hikes coming by next summer. So we'll find out in a few short hours what the Fed decides to do. On a side note, how relieved do you think that Jerome Powell is right now that he's not the Fed chair anymore? Because the Fed is in a pretty tricky spot. I also wonder how President Trump is gonna react if the Fed does end up hiking interest rates. I'll be staying on top of all of that today, and I'll recap everything on tomorrow's show. I'll also try to post an instant reaction on The Rundown's Instagram account. We'll put the link in the description. So follow us there for that and more market content. And if you're a first time listener of the show, you definitely picked a great time to join. Definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop.

Let's run through some headlines. Starting with Mark Zuckerberg and Jensen Huang. Zuck and Jensen weighed in on the calls for an AI slowdown by Anthropics CEO Dario Amadei and others earlier this week. And shocker, they don't seem to agree. On Monday, Jensen said that he believes that the market forces are already there and that we don't need any new laws or any new regulations when it comes to AI. Now keep in mind, Jensen is the CEO of a company that sells AI chips, so an AI slowdown would be bad for business. But he's not the only one that feels that way about an AI slowdown. Meta CEO Mark Zuckerberg wrote a long post on X on Tuesday night, pretty much saying the same thing. I gotta say, the post was pretty solid. Now he didn't name drop Anthropic or Dario specifically, but he did say that every AI lab should be responsible for their own safety. He said these labs are incentivized to be safe because AI labs risk significant liability if their models cause harm. He even gave the example that Meta actually delayed their Metamuse agent app for several months because of safety and security concerns. But Meta didn't demand Anthropic, OpenAI and everybody else to stop developing while they figured things out. So I thought that Zuck made a good point. If Anthropic thinks that their next model is too dangerous, well, maybe Anthropic should slow down themselves. But asking every competitor to slow down, I mean, that doesn't make any sense. Now Zuck did say he supports more independent safety evaluators looking into these models. So he's not arguing that AI safety doesn't matter. He just doesn't think there needs to be any further AI regulation. So like I said on Monday, I think it's going to be business as usual when it comes to AI and development. I did see an interesting theory that Anthropic, OpenAI and SpaceX might have hit a plateau when it comes to AI model capabilities. But they don't want to admit that because that could hurt their valuation. And that's why they're framing this whole narrative of purposely slowing down in the name of safety. It's actually not a bad theory. One more quick news on Meta. Meta has their MetaConnect conference next week. And the information is reporting that the company is planning to launch a new pair of smart glasses called Luna that has no cameras on them. There's been a lot of backlash recently about cameras on Meta's smart glasses and how they're really creepy. So Meta is planning to take the cameras out and just put a smart AI model on their glasses with speakers and a microphone so you can talk to it. So yeah, they're trying to make it a little bit less creepy. By the way, Meta stock is up nearly 20% in the past month, which is the best performing stock out of the Mac 7