Originally published at: Child Punished for Art, AI Market Mayhem Ensues – Peak Prosperity
A California family is appealing a federal court ruling that punished a first-grade student, B.B., for creating a drawing after a history lesson. The drawing, intended to support her black classmate, included the phrase “Black Lives Mater [sic]” and “any life,” which offended school officials. The U.S. Court of Appeals for the Ninth Circuit is now involved. B.B., who has ADHD and uses art therapeutically, made the drawing to show racial harmony. However, the “any life” addition was seen as problematic, reflecting tensions around the “Black Lives Matter” movement and the “all lives matter” response. The school principal required B.B. to apologize, restricted her recess, and banned her from drawing at school, causing her emotional distress. The Pacific Legal Foundation (PLF), representing B.B. and her mother, argues that the punishment violated B.B.’s First Amendment rights. They claim the school overreacted and failed to explain the issue to B.B. or her parents, who only learned about it a year later. The district court dismissed the federal claims, stating the punishment did not violate the First Amendment and that the drawing interfered with the classmate’s right “to be let alone.” PLF contends this ruling contradicts Supreme Court precedents on students’ rights. The Capistrano Unified School District has declined to comment on the ongoing legal matter.
Meanwhile, the discussion on r/wallstreetbets revolves around the current state of the market, particularly focusing on AI investments and their potential impact. Users debate whether the current AI boom is different from past tech euphoria, with some suggesting that AI investments resemble venture capital strategies—many failures but a few significant successes. There’s skepticism about AI’s long-term returns, with some predicting that big tech companies will eventually face the reality of unprofitable AI ventures. The conversation also touches on historical market trends, comparing current conditions to past periods of tech innovation and economic shifts. Some users highlight the role of machine learning in the industry since the early 2010s, noting that what is now called AI has been evolving for years. Others criticize the comparison of current tech stocks to historical indexes, arguing that the methodologies are flawed. Economic indicators such as money supply tightness, interest rates, housing market declines, and national debt are discussed as potential tipping points for a market downturn. There’s a sense of anticipation that another significant event could trigger a broader market collapse. The thread also includes lighter comments and humor, reflecting the community’s mix of serious analysis and casual banter.
The current economic situation in the U.S. is being described as a “recession of opportunity,” where despite data not fully reflecting it, there’s a noticeable lack of job opportunities. This is evident in rising unemployment rates and increasing jobless claims, particularly continued claims, which indicate that those who lose their jobs are struggling to find new ones. This trend is leading towards a more traditional recession, prompting discussions about potential Federal Reserve rate cuts. Steve Van Meter highlights the significance of labor market data, noting that initial jobless claims rose by 20,000 and continued claims increased by 157,500, reaching 1.53 million. This rise in continued claims suggests a growing lack of opportunity, as people on unemployment insurance deplete their savings and reduce spending, which further impacts the economy. The conversation points out that businesses are hesitant to hire due to rising costs and weak revenues, despite acknowledging a lack of qualified labor. This hesitation is contributing to the economic slowdown, even during typically busy summer months. The Federal Reserve is beginning to recognize these issues, with officials like Chicago Fed President Goolsbee expressing concerns about the labor market and the potential need for rate cuts to address rising unemployment. However, the effectiveness of rate cuts is questioned. Historically, rate cuts have not prevented recessions and often come too late to make a significant impact. Banks are unlikely to lend during a recession due to increased risk, regardless of lower interest rates. This cycle of rate cuts in response to rising unemployment is expected to continue, potentially leading to a rapid reduction in the federal funds rate to zero. Investors should be cautious, as historical patterns show that rate cuts often precede bear markets in stocks. The current belief that a few rate cuts will boost the economy and markets may be misguided. The overall message is that the economy is moving towards a more severe recession, and the anticipated rate cuts may not provide the relief that many expect.
Sven Henrik from NorthmontTrader.com recently moved to cash after closing all his long positions due to market concerns. Sven explains his cautious stance, noting unusual market behaviors and technical indicators. He highlights the Russell 2000’s recent surge, driven by oversold conditions and a significant rotation into lagging indices. Despite this, he remains wary due to the market’s bifurcation and the potential for a pullback. Sven discusses various technical charts, including the NYSE Oscillator (NYO) and the broader NY index, which showed oversold conditions before a rapid move to overbought. He also points out the Russell 2000’s breakout and subsequent overbought status, suggesting a potential pullback. He emphasizes the importance of technical levels, such as the S&P 500’s 1.618 Fibonacci retracement, which has shown resistance. Sven also notes the NASDAQ’s trendline and the potential for a larger correction if key levels break. Sven mentions the market’s extreme valuations, with the market cap to GDP ratio at 20.9%, indicating a highly stretched market. He also highlights the VIX’s recent spike, suggesting increased volatility and the potential for a market pullback. Despite these concerns, Sven acknowledges the positive breakout in equal-weight indices and the potential for further gains if earnings support the rotation into small caps. He advises caution and emphasizes the need for tactical trading and risk management.
Sources
California Family Challenges School’s Punishment of First Grader Over Drawing in Federal Appeals Court
B.B. was trying to make her friend feel included—that was the whole entire motivation behind it.
Source | Submitted by irenelekkas
AI Euphoria: Is This Time Different for Wall Street?
Until LLMs hit the wall, the dream that AI is the next big thing keeps going.
Source | Submitted by Shplad
Recession of Opportunity: Rising Jobless Claims Signal Economic Turbulence Ahead
This has been a recession of opportunity thus far.
Source | Submitted by rhollenb
Market Maven Moves to Cash: A Deep Dive into Sven Henrik’s Sudden Shift
We are living through probably the most distorted business cycle we’ve ever seen, one because of all the legacy interventions we’ve had over the last 15 years.
Source | Submitted by rhollenb