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Inflation concerns rattle Treasuries and stocks.

Investors have shown they are excited about AI's prospects, but they want tech companies to continue to focus on revenue and profit in the meantime.

Roiled markets | Bond and stock markets were rattled on Thursday by data that showed exactly what investors did not want to hear: a sharp slowdown in the world’s largest economy and stubborn inflationary pressures. Treasuries sold off, with yields hitting fresh 2024 highs as the economic figures revived chatter about “stagflation” — bringing more uncertainty to the path of Federal Reserve policy. Swap traders pushed back their expectations for the timing of a first-rate cut to December. Stocks also struggled but trimmed most of an earlier slide amid a surge in two heavyweights: Nvidia and Tesla. Their rally offset a post-earnings plunge in fellow megacap Meta Platforms.

Resilient economy | The surprisingly sharp downshift in US economic growth last quarter masked otherwise resilient household demand and business investment that helped generate faster inflation. GDP advanced at a 1.6% annualized rate, below all economists’ projections, with the biggest restraints stemming from less inventory accumulation and a wider trade gap. But so-called final sales to private domestic purchasers, which strips out inventories, trade, and government spending, rose at a 3.1% rate after adjusting for inflation. For three straight quarters, this key gauge of underlying demand has expanded at least 3%. That helps explain why the Fed’s progress on tamping down inflation late last year has stalled. A closely watched measure of underlying price pressures advanced at a greater-than-expected 3.7% clip last quarter, the first acceleration in a year.

Up & coming | The Bank of Japan decision will be the big event of the Asian trading day on Friday. The mere lack of any hawkish comments from BOJ Governor Kazuo Ueda on Friday could be enough to push the currency toward a possible inflection point that prompts intervention. There has been no sign yet of yen purchases from the government, even as the currency has tumbled to its weakest level in three decades, but traders are keenly alert to the possibility. Looking beyond the BOJ, investors will focus on the release of personal income and spending data in the US, with the closely watched PCE inflation indicator as the main event.

Illustration: Kyle Ellingson | The Wall Street Journal

America's economy is No. 1. That means trouble.

If you want a single number to capture America’s economic stature, here it is: This year, the US will account for 26.3% of the global gross domestic product, the highest in almost two decades. That’s based on the latest projections from the International Monetary Fund. According to the IMF, Europe’s share of world GDP has dropped 1.4 percentage points since 2018, and Japan’s by 2.1 points. The US share, by contrast, is up 2.3 points. Solid growth, big deficits, and a strong dollar stir memories of past crises. (The Wall Street Journal | Apr 24)

401(k) advice, overtime rules poised to reprise Obama-era fights

Two signature US Labor Department policies are almost certain to face a test of whether the latest updates to the agency’s regulations can survive legal deficiencies that led to the demise of their Obama-era predecessors. The Biden administration released final rules Tuesday to extend overtime pay protections to cover millions more US workers and to expand strict fiduciary standards of conduct to cover more retirement plan advisers. Both immediately drew pushback from business groups and Wall Street. (Bloomberg Law | Apr 24)

SEC in talks with firms on becoming US Treasury clearinghouses

The Securities and Exchange Commission is in talks with firms seeking to become central clearinghouses for US Treasuries and derivatives trading under a new agency rule designed to fortify the world’s largest debt market. The discussions are a response to the SEC’s move in December to finalize a rule requiring the migration of a large swath of Treasuries trading and almost all repurchase agreements linked to the debt to a central counter-party clearinghouse, or CCP. (Bloomberg Markets | Apr 23)

Move aside, big banks: Giant funds now rule Wall Street

Giant investment companies are taking over the financial system. Top firms now control sums rivaling the economies of many large countries. They are pushing into new business areas, blurring the lines that define who does what on Wall Street and nudging once-dominant banks toward the sidelines. Today, traditional and alternative asset managers control twice as many assets as US banks, giving them increasing control over the purse strings of the US economy. (The Wall Street Journal | Apr 22)

New York Stock Exchange tests views on round-the-clock trading

The New York Stock Exchange is polling market participants on the merits of trading stocks around the clock as regulators scrutinize an application for the first 24/7 bourse. The survey by the NYSE, part of Intercontinental Exchange, was put out by its data analytics team rather than its management. Still, it highlights the growing interest in trading the likes of Nvidia or Apple overnight between 8 pm and 4 am Eastern time. (Financial Times - free link | Apr 22)

Illustration: The Wall Street Journal | iStock photos

It's not you. Those 'I am not a robot' tests are getting harder

Scott Nover was trying to log in to a website on his laptop when he found himself staring at a bizarre portrait of a woodland creature wearing a jacket and vest with flowers and watermelon slices floating about. "Please click on the raccoon's bow tie," came the instruction. Nover, a freelance journalist, wasn't dreaming. He had entered the strange new world of Captchas — those annoying computer quizzes cooked up by web security experts to distinguish humans from nefarious bots.

— The Wall Street Journal

What an Indian deepfaker tells us about global election security

Artificial intelligence-powered creations — deepfake videos, conversational bots, personalized messages and holograms — can go viral to millions of voters in dozens of languages within hours. And have never been in such high demand. some of that is from legitimate sources seeking help to target voters via translations, but there are concerns about the technology being abused. It’s never been easier or cheaper to create a deepfake, sparking fears that polls worldwide could be compromised and trust in the electoral system undermined.

— Bloomberg Politics

Cisco Talos details ArcaneDoor campaign found targeting perimeter network devices across critical infrastructure

New data released by Cisco Talos researchers detailed ArcaneDoor, a new espionage-focused campaign that targets perimeter network devices. The use of these devices across critical infrastructure installations, like telecommunications companies and energy sector organizations, has increased dramatically over the last two years. These entities are likely strategic targets of interest to many foreign governments. On Wednesday, Cisco released security updates to address ArcaneDoor's exploitation of Cisco Adaptive Security Appliances (ASA) devices and Cisco Firepower Threat Defense (FTD) software.

— IndustrialCyber

In “Outlive: The Science and Art of Longevity,” Peter Attia, one of the most prominent longevity evangelists, extrapolates from scientific data to offer jarringly intense and specific advice. Illustration: Jun Cen | The New Yorker

How to die in good health

Many of us have come to expect that our bodies and minds will deteriorate in our final years — that we may die feeble, either dependent or alone. Paradoxically, this outcome is a kind of success. For most of history, humans didn’t live long enough to confront the ailments of old age. But twentieth-century victories against infectious diseases — in the form of sanitation, antibiotics, and vaccines — dramatically extended life spans, and today the average newborn lives to around seventy-seven. Lately, though, progress has slowed. A growing number of celebrity doctors, futurists, and so-called biohackers now argue that it doesn’t have to be this way.

— The New Yorker

CFTC weighs outright ban for derivatives bets on US election

A top Wall Street regulator is considering an outright ban on using derivatives to bet on US elections as part of a crackdown on so-called event contracts. The Commodity Futures Trading Commission’s draft proposal would boost oversight of the contracts that have let people wager on real-world outcomes such as monetary policy, lunar landings, and music awards. Beyond elections, the CFTC may also prohibit some contracts on sports and calamities such as global health crises.

— Bloomberg Markets

Why do we fall for disinformation?

“Check the facts.” “Examine the evidence.” “Correlation is not causation.” We’ve heard these phrases enough times that they should be in our DNA. If true, misinformation would never get out of the starting block. But countless examples abound of misinformation spreading like wildfire. This is because our internal, often subconscious, biases cause us to accept incorrect statements at face value.

— World Economic Forum