What I Read This Week…

CPI decreases 0.1% in June, the spread between the S&P 500 and the S&P Equal Weight index is at a two-decade high, and scientists discover a new treatment for lupus

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Caught My Eye…

• The Labor Department reported that CPI decreased by 0.1% in June, indicating that inflation has cooled. What does this mean for the Federal Reserve's interest rate policy and for American consumers? Investors now see an increased likelihood of a rate cut later this year, especially since the U.S. labor market has cooled as well. Meanwhile, while inflation is slowing, its cumulative effect continues to strain many American households, as prices for groceries and other everyday items are around 20% higher than they were four years ago.

• The spread between the S&P 500 (weighted by market capitalization) and the S&P 500 Equal Weight index is the highest it’s been in over two decades. This gap is largely due to the AI-fueled rally of the “Magnificent 7” stocks, with Nvidia alone accounting for 34.5% of the S&P 500’s growth this year. If the optimistic projections for AI fail to materialize, it could trigger a sharp decline of the index as a whole. Analysts at Bespoke Investment Group reported that the only time the spread was higher than now was in March 2000, just before the dot-com bubble burst.

• Scientists may have discovered a potential new treatment for lupus, an autoimmune disease in which the body's immune system mistakenly attacks its own tissues. This new treatment involves activating the "on-off" switch for immune responses (called the aryl hydrocarbon receptor) via a small molecule drug. The drug reduces the production of autoantibodies that attack healthy tissue in patients with lupus. This approach could offer a more targeted treatment compared to current lupus therapies, which typically involve broad suppression of the entire immune system.

Other Reading…

• Shooting at Trump Rally Comes at Volatile Time in American History (NYTimes)

• 'It's Already Disastrous': Biden Campaign Fundraising Takes a Major Hit (NBC News)

• Lessons From the French and British for Bolstering U.S. Democracy (The Washington Post)

• Big U.S. Banks Warn of Stress Among Lower-Income Consumers (Financial Times)

• Andreessen Horowitz Is Building a Stash of More Than 20,000 GPUs to Win AI Deals (The Information)

• Ex-Meta Scientists Debut Gigantic AI Protein Design Model (Nature)

• Why Most Battery-Makers Struggle to Make Money (The Economist)

• A Short History of Taiwan and China, In Maps (The Economist)

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