The Fed's Beige Book reveals a "two-speed economy" in the U.S.: private employment added 122,000 jobs in May, capital expenditures are being driven by AI data center construction, Alphabet's fundraising has increased to $84.75 billion, and SpaceX's valuation is nearing $1.8 trillion; however, consumer confidence has fallen to a historic low, real wages are declining, and some companies have postponed investment plans. Core inflation stands at 3.8%, above the 2% target, primarily fueled by energy, tariffs, and AI-related capital spending. New York Fed President Williams believes no rate hike is currently necessary, while Dallas Fed President Logan suggests further rate increases may be needed this year. Bridgewater founder Dalio warns that AI investments may exhibit bubble characteristics, urging the market to focus on the alignment between valuations and profitability. The world’s first ETF to surpass $1 trillion in assets, VOO, has emerged, with capital concentrated among a few leading corporations.
Fed Cautious on Inflation and AI Investment Risks Amid Economic Divergence
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Summary
AiCoin reports that the Fed’s Beige Book reveals a divided U.S. economy, with 122,000 private-sector jobs added in May and AI-driven capital spending boosting Alphabet’s financing to $847.5 billion and SpaceX’s valuation close to $1.8 trillion. Consumer confidence is at a record low, real wages are declining, and core inflation remains at 3.8%, fueled by energy prices, tariffs, and AI investments. New York Fed President Williams sees no need for rate hikes, while Dallas Fed President Logan suggests possible increases. Bridgewater’s Dalio warns of risks from AI and crypto-related news, urging better alignment between valuations and profitability. The first $1 trillion ETF, VOO, has emerged, with capital concentrated among a few major firms.
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