📊 Is The US Facing Economic Distress?

Good morning. US stock futures were mixed in Tuesday morning trading as investors await inflation data for a better picture of the market’s outlook.

🤖 US still facing “economic distress” in post-pandemic era

📝 Our report: According to the latest data from the Economic Innovation Group's (EIG) Distressed Communities Index, local economies across America are still feeling the COVID-19 hangover as of 2023. According to EIG, which uses US Census Bureau data to sort districts by economic well-being, roughly 52 million Americans live in a "distressed" zip code. That's up from 50 million in 2018.

 🔑 Key points:

• Distress scores are calculated based on weighted factors. Those factors include the number of residents with a high school diploma, the poverty rate, the number of adults not working, the housing vacancy rate, the median income ratio, changes in employment, and changes in the number of business establishments.

• EIG discovered that in recent years, urban areas across the country have become increasingly "distressed" while the surrounding suburbs are considered more "prosperous."

• The pandemic also highlighted significant wealth disparities among populations: Those who had the financial means to move out of cities and into suburbs did so, leaving behind lower-income residents in urban areas.

💡 So what: The Economic Innovation Group's Distressed Communities Index reveals that many local economies in the United States are still struggling to bounce back from the COVID-19 pandemic. The persistent economic distress could lead to wider gaps in income inequality, hinder overall national economic growth, and necessitate targeted interventions and policies to support the most affected areas.

Tuesday - Consumer Confidence, Minneapolis Fed President Neel Kashkari Speaks

Wednesday - Fed Beige Book, Atlanta Fed President Raphael Bostic speaks

Thursday - Pending Home Sales, New York Fed President John Williams Speaks

Friday - No Major Economic News

📈 Investing legend Li Lu shares these 9 investing tips!

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🦾 China splashes top dollar on domestic chip manufacturing push

WHAT: China has rolled out its biggest-ever semiconductor investment fund to supercharge its homegrown chip industry, aiming for self-sufficiency as the US tries to keep its tech in check. The third phase of National Integrated Circuit Industry Investment Fund has amassed 344 billion yuan ($47.5 billion) from the central government and various state-owned banks and enterprises to fund domestic manufacturing efforts.

WHY: The latest investment vehicle, known as Big Fund III, underscores a renewed push from Xi Jinping’s government to build its own semiconductor industry as tensions with the US escalate. The Biden administration has imposed sweeping restrictions on China’s ability to buy advanced chips and chipmaking equipment from the west.

☀️ EU passes law to ramp up green tech production

WHAT: The European Union just greenlit a new law to ensure the bloc cranks out 40% of its solar panels, wind turbines, heat pumps, and other clean tech gear, aiming to give European industry a fighting chance against the U.S. and China. The Net Zero Industry Act (NZIA) is a centerpiece of the EU's push to ensure it is not only a global leader in cutting greenhouse gas emissions, but also in manufacturing the technology required.

WHY: Europe is increasingly relying on China, which is forecast to have 80% of global manufacturing capacity in solar power. The EU also has concerns that the $369 billion of green subsidies in the U.S. Inflation Reduction Act will entice European producers to relocate.

🤖 Musk startup raises billions for AI development

WHAT: A group of investors is splashing $6 billion on Elon Musk's xAI to turbocharge AI development. According to the company’s website, the Series B funding will help launch xAI's first products and speed up research. xAI claims it has made "significant strides" over the past year and promises more progress in the months ahead.

WHY: The funding should help Musk's company compete in a race to develop artificial intelligence against Microsoft and Open AI, which created Chat GPT.

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