Listen on the go! A daily podcast of Wall Street Breakfast will be available by 8:00 a.m. on Seeking Alpha, iTunes, Spotify.
Which AI-related risk are you more concerned about?
Click here to take the poll and don’t forget to share your thoughts in the WSB comments section.
Good morning! Here’s the latest in trending:
Stalemate broken: Oil jumps as U.S. strikes Iran for first time in weeks; Trump posts AI video of Kharg.
Securing supply: U.S. to refill SPR with Venezuela’s oil, eyes stake in Venezuelan mogul’s venture.
Dark universe: NASA launches Nancy Grace Roman Space Telescope aboard SpaceX (SPCX) rocket.
G20 finance ministers and central bank officials have convened in Asheville, North Carolina at a time when the world is reeling from the fallout of the Iran war, tariffs and rising long-term borrowing costs. In this backdrop, the head of the G20’s Financial Stability Board has warned the group of the growing threat posed by frontier artificial intelligence models.
Financial stability risk: “New technologies and changing market structures present significant opportunities, but they also require continued vigilance and international cooperation,” Andrew Bailey, who also heads the Bank of England, stated. He observed that AI models are showing increasingly sophisticated autonomy, problem-solving abilities and threat capabilities. “The risks associated with frontier AI will not respect national borders,” Bailey noted. “The global financial system is highly interconnected, and cyber disruption can spread across jurisdictions through common technology providers, shared infrastructure, and cross-border financial activity.” Bailey called on financial institutions, financial market infrastructures and technology providers to strengthen vulnerability management and prepare for scenarios involving simultaneous disruption on multiple fronts. His warning follows recent hacks by AI models from OpenAI (OPENAI), Anthropic (ANTHRO) and Meta (META).
Equity market risk: Bailey listed vulnerabilities that could trigger “a potentially disorderly” markets correction – fragilities in sovereign debt markets (including elevated issuance and shortening maturities); vulnerabilities in private credit; and stretched asset valuations (particularly AI-related investments). Another concern is the growing use of leverage in equity markets, including leveraged ETFs and correlated momentum-driven investment strategies. “A growing footprint of leveraged entities, such as hedge funds in equity markets, which are also exposed to sovereign debt, increases the scope for contagion risk,” Bailey said. “The issue is not simply that investors are borrowing more, but that leverage is interacting with high valuations and market concentration, in particular the increasing cross-investment between AI companies and hyperscalers, in a way that could amplify a future market correction.” Situational Awareness: Lessons of leverage from the AI trade
G20 outlook: As for the group’s meeting, which will run through Tuesday, U.S. Treasury Secretary Scott Bessent is expected to press the world’s largest economies to reduce trade imbalances and isolate Iran financially. The gathering marks an attempt to reassert U.S. leadership in the G20 after Washington largely avoided last year’s summit in South Africa. Markets will be watching for signs of tighter Iran sanctions, additional tariffs or coordinated efforts to stabilize financial markets. Questions about America’s $40T debt burden and rising long-term borrowing costs also are likely to loom over the meeting. Bessent said he will urge G20 members to review trade terms with China and press Beijing to shift its focus from exports to domestic consumption. “In China, the economy is quite weak, and they are trying to export their way out of it, and they need to rebalance their economy,” he said. Take the WSB survey.
Here’s the latest Seeking Alpha analysis
10-14% Yielding Monthly Dividend Machines To Supercharge Your Early Retirement
I Am Buying These 2 Income Picks Hand Over Fist
Nvidia: A 16.0x P/E Is A Crime
My Top 2 Covered Call ETFs For Volatility-Powered Income
Rocket Lab Doesn’t Need Neutron To Justify This Quarter, But Does For What’s Next
What else is happening…
Amazon (AMZN) brings external AI models to AWS GovCloud.
OpenAI (OPENAI) issued warrants worth $5.5B in SB Energy.
Trump seeks ways to shield farmers from refinery biofuel waivers.
Toyota (TM), Honda (HMC) may bear the brunt of Canada tariffs.
Wealthy Americans turn to life insurance for tax-free investing.
Gold bulls turn to lower-cost options as debt fears weigh on dollar.
Warsh signals possible Fed hike despite Trump’s demand for cuts.
European central bankers fear U.S. policy shifts could rattle markets.
Spider-Man (SONY), Coyote vs. Acme lead weekend box office.
Jio, backed by META and Google, set for India’s biggest IPO.
Today’s Markets
In Asia, Japan -0.1%. Hong Kong -0.1%. China +0.9%. India -0.4%.
In Europe, at midday, London closed. Paris -0.1%. Frankfurt -0.9%.
Futures at 6:30, Dow -0.2%. S&P -0.2%. Nasdaq -0.1%. Crude +3.9% to $86.63. Gold -0.7% to $4,500.10. Bitcoin +0.4% to $78,372.
Ten-year Treasury Yield unchanged at 4.73%.
On The Calendar
Companies reporting today include LexinFintech (LX) and Science Applications International (SAIC).
See the full earnings calendar on Seeking Alpha, as well as today’s economic calendar.