Raphael Stevens

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Evercore ISI’s Julian Emanuel thinks Nvidia’s monster rally is fueling a fear of missing out in the market.
He finds clients, including many who traded through the dot-com boom and subsequent collapse, are more worried about being underinvested than overexposed right now.

“That’s the first time that’s happened since 2021 for us,” the firm’s senior managing director said on CNBC’s “Fast Money” on Monday. “That’s a bit of an alarm bell.”
In his Sunday note, Emanuel warned clients there are similarities to Y2K emerging, particularly when it comes to momentum. This time around, he cites excitement around artificial intelligence and the idea the U.S. will avoid a recession as major catalysts.
“The sentiment is very, very bullish. The bears have been eliminated,” he told CNBC’s Melissa Lee. “It’s time to think more about risk than reward until we get just a little cooling off.”
On Monday, the Dow closed at an all-time high to 38,797.38. The tech-heavy Nasdaq Composite is up 6% so far this year and is less than 2% off its record high.
Meanwhile, Nvidia, the global leader in artificial intelligence chips, is up 46% so far this year and 240% over the past year.

Emanuel believes stocks could go through a 13% pullback this year, which he considers normal during a nonrecession period. “If you can’t see yourself being a buyer down there, you should probably lighten up a little bit,” said Emanuel.
However, he hasn’t completely ignored the winning growth trade.
“We have been on board in pieces,” he said. “We like communication services. It’s been a great sector. We think there are defensive properties.”
Emanuel’s top picks also include consumer staples, health care and money markets.
“At the end of the day, you’re still making 5% on cash,” he added.
His S&P 500 year-end target is 4,750, which implies a roughly 5% loss from Monday’s close.
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Whenever a global economic transformation takes place, a single city usually drives it forward. Ghent, in modern-day Belgium, was at the core of the burgeoning global wool trade in the 13th century. The first initial public offering took place in Amsterdam in 1602. London was the financial centre of the first wave of globalisation during the 19th century. And today the city is San Francisco.California’s commercial capital has no serious rival in generative artificial intelligence (AI), a breakthrough technology that has caused a bull market in American stocks and which, many economists hope, will power a global productivity surge. Almost all big AI startups are based in the Bay Area, which comprises the city of San Francisco and Silicon Valley (largely based in Santa Clara county, to the south). OpenAI is there, of course; so are Anthropic, Databricks and Scale AI. Tech giants, including Meta and Microsoft, are also spending big on AI in the city. According to Brookings Metro, a think-tank, last year San Francisco accounted for close to a tenth of generative-AI job postings in America, more than anywhere else. New York, with four times as many residents, was second.This has changed the mood of San Francisco. When you live in the city, you can feel AI in the air. Drive to the airport and every second billboard tells you the various ways in which your business can improve by adopting AI. Go to a party and every second guest says that they are working on the tech or in an industry being transformed by it. Barely a day goes by without some nerdy event to satisfy your curiosity about the world’s liveliest intellectual field, from talks about the philosophy of artificial general intelligence to MLHops, a meet-up for AI folk who like beer.How is this happening somewhere supposedly falling apart? Even before the covid-19 pandemic there was a sense that the best days of San Francisco and the wider Bay Area had passed. In the late 2010s worries about crime and rising taxes saw other cities, including Austin, Los Angeles and Miami, hyped as the “next Silicon Valley”. According to data compiled by PitchBook, a financial database, at the start of 2014 firms in the Bay Area attracted four times more venture funding than New York, the next-biggest metro area. By the end of 2020 they attracted only 2.5 times as much.Covid did not improve the situation. San Francisco locked down early, hard and for a long time, crushing employment in service industries. The city’s tech elite realised they could work from home, emptying downtown. After the murder of George Floyd in 2020, many in city government turned against the police. Officers felt the city no longer had their back. From 2019 to 2022 their numbers fell by 14%. In 2021 Elon Musk left for Texas, the richest of the many who quit San Francisco that year.Action in startup-land moved elsewhere, too. The hottest firms were foreign, such as Ant Group, a Chinese “super-app”, at least until it was forced to abandon plans to go public, and Grab, a Singapore-based ride-hailer, which listed at a valuation of $50bn. Venture dealmaking in San Francisco inflated along with a wider market bubble. But when interest rates jumped in 2022, the entire industry shut down. Valuations of venture-backed firms halved between the end of 2021 and the end of 2022.image: The EconomistAcross the world “San Francisco” is now shorthand for a failed city. Drug overdoses and homelessness have soared; the city’s population fell by 8% from April 2020 to July 2022. Just 52% of Americans polled by Gallup last year viewed San Francisco as a safe place to live, down 18 percentage points from 2006. Conservatives, in particular, see the city as an example of what happens when you let social-justice warriors run amok. Today, if you so choose, you can drive through red lights at high speed with impunity—police have almost completely stopped issuing traffic citations as they prioritise other crimes. More than 30% of offices are vacant. Market Street, the city’s main drag, has an astonishing number of empty shops.There are now signs that the local quality of life is starting to improve: overdoses have begun to fall; in the final months of 2023 car break-ins halved. Yet the start of the ai boom predated these changes. Despite headlines about an exodus of the rich, San Francisco’s tech elites mostly weathered the storm—its population decline was, in fact, mostly driven by the exit of poorer folk. As a result, inhabitants are now better paid and more educated than before covid. According to official data, the pre-tax total income of the average working person in San Francisco is around $220,000 a year, compared with $130,000 across the country. Even as poor residents have left, income inequality has soared.image: The EconomistMany of the people with the skills to ride the AI wave were already in San Francisco or nearby. Most of today’s tech giants were founded in the suburban neighbourhoods that make up the Valley. Today they, and other big tech firms, have huge campuses 20 or 30 miles south of San Francisco, but their young employees rent cupboard-sized flats in the city. Much of the funding for the AI boom is coming from these tech behemoths. In 2022 and 2023 firms such as Meta completed more Bay Area-based venture-capital investments than ever before, largely focused on AI. Owing to a mix of government support and creative counterculture, Stanford University and the University of California, Berkeley, have long been centres of AI excellence specifically. In 2017 eight people published a paper, “Attention is all you need”, which recently has become known even outside AI circles as the groundbreaking contribution to the current wave of technological progress. Almost all were based in or near the city. By 2021 San Francisco and nearby San Jose accounted for a quarter of conference papers on the topic, according to the Brookings Metro analysis.Academic excellence has fed private-sector innovation, with many researchers moving between the two spheres. Nine were hired to build OpenAI. At first, they laboured in the apartment of Greg Brockman, one of its co-founders, in the Mission District. Data from LinkedIn, a job-search platform, suggest that one in five of OpenAI’s engineering staff in America attended Berkeley or Stanford. Now San Francisco’s AI concentration has reached a critical mass, with success begetting further success. London and Paris may be AI rivals, but they are a long way behind.image: The EconomistThus investors are again spending big in the Bay Area. Venture funding to San Francisco-based startups halved between 2021 and 2022, but recovered to two-thirds of its peak in 2023. By contrast, in Miami just a quarter as much funding went to startups in 2023 as in 2021. Finance types who once worked in Silicon Valley are moving into the city to be closer to the action. Y Combinator, which helps startups get off the ground, recently set up shop. Venture-capital firms from General Catalyst to Pear VC have opened new offices. In desirable neighbourhoods competition for rental properties is fierce, as the city’s population once again grows. The arrival of lots of well-paid tech types has boosted house prices. Although they fell by more than 12% from their pandemic highs, they have risen since the start of 2023. The city has fewer restaurants than in 2019, but about the same number with two or three Michelin stars. North of the city, in wine country, there is no shortage of new, expensive hotels at which venture capitalists and founders can relax.Some elites see San Francisco’s AI success as a precursor to a broader transformation of the city. Locals are fed up with having to call 911 because someone is overdosing in front of their children. In 2022 they ousted Chesa Boudin, a progressive district attorney, and three members of the school board who were more concerned with renaming schools than reopening them. On March 5th they will vote on measures championed by moderate Democrats, including one that will try to get homeless people suffering from mental illness off the streets. In November they will choose a raft of local officials and perhaps whether to give the mayor more power.London Breed, the current office holder, sounds genuine when she talks of the need to improve public safety and cut red tape: “Rather than being a city that says ‘no’ all the time”, she explains, we need “to get to ‘yes’ by getting rid of bureaucracy.” She is being pushed by political groups that have formed as tech types take a keener interest in local politics, including GrowSF and TogetherSF, the latter co-founded by Michael Moritz, a famed venture capitalist.Defending the indefensibleThese efforts face stern resistance. Aaron Peskin, president of the Board of Supervisors, the city council, is the de facto leader of San Francisco’s progressives. He argues that Mr Moritz and his fellow campaigners are “amateurs” who are dressing up their own elite interests in the language of reform. “I generally think that people believe their own bullshit,” he says. (Unsurprisingly Mr Moritz disagrees: “It’d be easy for us to pick up roots and…go to a low-tax state or go to Europe.”) Even today plenty of the city government’s time is wasted on pointless projects such as deciding whether or not to call for a ceasefire in Gaza. The local NIMBY movement is extremely powerful. And cartoonish corruption remains a problem: in 2022 the former director of public works was sentenced to seven years in prison for taking huge bribes.Yet it may not matter much to the AI boom if San Francisco remains chaotic. If you want good schools, public transport or public safety, San Francisco is not the place for you. If you do not need these things, or you can buy your way around them, then the city remains a great place in which to innovate. Covid tested the “network effects” that people in Silicon Valley believed were crucial to its success. It turned out they were as powerful as ever. That founders, firms, money and workers are returning to San Francisco suggests that remote work has not killed their importance. The city is still the place to be if you want to meet a co-founder by chance at a party.Can the AI-driven excitement last? For now it is attracting people to the city; in time, it could cut the workforce needed for startups. “With AI you might not need 50 developers to start a firm—maybe you just need five,” speculates Auren Hoffman, a founder who moved from San Francisco to Washington, DC, a few years ago. Another risk is that the AI boom will amount to less than the bulls hope, perhaps because fewer than expected businesses actually adopt AI tools. Yet as real as these concerns are, they are also ones that just about every other city would love to face. When it comes to governance, San Francisco breaks all the rules. At the same time, it is the richest place on earth, and getting ever richer. ■ More

Digital banking startup Revolut is launching travel eSIM plans in the U.K. that give users access to data abroad without suffering roaming charges.
The product launch is a rare step for a financial services company, and is part of Revolut’s long-term ambition to become “super app” with multiple services spanning finance and travel.
Subscribers to Revolut’s Ultra subscription tier will get access to 3GB of data for use across different countries, which resets every month.

Revolut is launching a travel eSIM plan in the U.K., in a rare move for a financial services firm.

British financial technology company Revolut is launching phone plans in the U.K., the company has told CNBC exclusively, making it the first financial services firm in the country to offer telecom plans — and among the first globally.
The digital banking and payments unicorn said it will start offering eSIMs — SIM cards that can be stored virtually rather than in physical form in the device — this week. The plans will begin rolling out for users in the coming days.

Customers on Revolut’s basic app experience without any subscription can get a standard eSIM plan that allows them to access their Revolut app so that they can top up their phone as and when needed. For instance, if a Revolut user arrives at an airport and runs out of data on their current SIM provider, they can still access features on their Revolut app free of charge and top up their data as usual.
Revolut customers on the company’s £55 ($69.47) a month, premium Ultra package will get 3GB of data to use globally, with a rolling refresh every month. That means that they will not have to worry about unexpected roaming charges when entering another country.

The cost of using mobile data overseas has increased for Brits in recent years. Several mobile carriers, including BT, Vodafone and Three, have reintroduced roaming charges since the U.K. left the European Union. Brits were previously able to travel across the EU without incurring roaming fees. Meanwhile, most mobile carriers don’t include free data in non-EU countries as part of their standard plans.
Revolut users without an Ultra subscription can get an introductory offer of 100MB of free data if they apply before May 1. The offer is valid for seven days.
Revolut has partnered with U.K. mobile network operator 1Global, formerly known as Truphone, to launch its eSIM.

Tara Massoudi, general manager of premium products at Revolut, said the decision for Revolut to launch eSIMs was to turn the company into more of an all-encompassing “super app” with services spanning bank accounts, currency exchange, insurance, travel bookings and airport lounge passes.

“Our ambition is very much to be the financial super app,” Massoudi told CNBC. “This is really in that direction.”
“Travel is a huge value prop that we’ve always had, and it’s still remained super important for our users,” Massoudi added. “So it’s important that we continue to innovate in that space.”
Launching phone plans is a rare step from a financial services firm. Plenty of challenger banks have bundled new services into their apps to give consumers more of a reason to use them over alternatives. The aim is to pull in a stickier customer base long term.
That’s pretty key in Revolut’s case. The company, which notched a $33 billion valuation in 2022, has been trying to get more of a loyal user base and grow its line of paid subscriptions to diversify revenue.
For that, it needs customers who use it as more of a permanent banking provider for all their financial needs, rather than just an optional low-fee travel account for when they go abroad.

Hermann Frank, CEO of tech startup Gigs, which helps businesses set up and sell their own branded eSIM phone and data plans, said Revolut’s move could prove lucrative for the firm in the long term.
“This move presents an easy avenue for Revolut to unlock a lucrative new revenue stream and could play a vital part in the company’s long-term profitability,” Frank told CNBC via email.
“By enriching their offering with branded phone plans, neobanks like Revolut can fuse two essential services in one single app, easing the user experience and further compounding stickiness.”
Retail spending on travel connectivity services, including roaming packages and travel SIMs, is expected to rise to over $30 billion by 2028, according to roaming and connectivity market intelligence and consulting firm Kaleido Intelligence.
“We foresee many other banks launching phone plans and travel offers in the coming 18 months,” Frank added.
Revolut isn’t the first fintech ever to launch an eSIM offering. Indian credit card startup Zolve, which helps immigrants set up banking before arriving in the U.S., started offering phone plans attached to physical SIMs and eSIMs in August. More

Central banks have embarked on austere monetary policy to crush inflation. Worries about the financial system, from bond markets to commercial property to the health of the banks, are ever-present. Some 4bn people will head to the polls this year, with unpredictable consequences. Most concerning of all, the world is on fire, with conflicts from Ukraine to Israel to the Red Sea. Other wars, not least in Taiwan, do not feel far away. Little wonder that analysts speak of “polycrisis”, “hellscapes” and a “new world disorder”.And yet, for the moment at least, the world economy is laughing in the face of these fears. At the start of 2023 almost all economists reckoned that a global recession was due that year. Instead, global GDP grew by about 3%. The early signs suggest progress is continuing at the same rate this year. Data from Goldman Sachs, a bank, indicate that global economic activity is about as lively as it was in 2019. A measure of weekly GDP produced by the OECD, a club of mostly rich countries, finds similar results. A measure of global activity produced from surveys of purchasing managers (so-called PMI data) points to strongish growth across the world.Labour markets are even stronger. The unemployment rate across the OECD remains comfortably below 5%. The share of working-age folk actually in a job, a better measure of labour-market strength, is at an all-time high. Healthy job markets are boosting family finances, which have been hit by inflation. Real household disposable incomes across the G7 shrank by 4% in 2022, but are now growing once again.True, some countries are doing less well. Chinese growth figures continue to disappoint. Some of those coming out of Europe are concerning. Germany, facing fallout from high energy prices and competition in its famed car industry from Chinese electric-vehicle exports, may be in recession. But there are also stronger showings. In January total nonfarm payroll employment in America rose by 353,000—a blow-out figure, surpassing almost all expectations.So far there does not seem to be much evidence that problems in the Red Sea are derailing the economy. PMI data suggest that manufacturers are facing longer delivery times. This is consistent with ships rerouting around the Cape of Good Hope, which increases the length of a journey between Shanghai and Rotterdam to 14,000 miles, from 11,000. Yet in almost all economies shipping costs are a tiny fraction of the overall price of a good. Even the most pessimistic wonks are pencilling in a jump in inflation, because of the Red Sea disruption, that amounts to little more than a rounding error.Why is the global economy so oblivious to the new world disorder? High interest rates have managed to bring down inflation from a peak of more than 10% across the rich world to about 6%. This not only raises households’ purchasing power; it also raises their spirits. Indeed, having hit an all-time low in 2022, rich-world consumer confidence has risen sharply. Higher borrowing costs have been muted by the fact that a lot of household and corporate debt is on fixed interest rates.There is also a more intriguing possibility: after so many shocking global developments, the world no longer minds chaos as much as it once did. This is consistent with academic evidence, including a recent paper by two researchers at the Federal Reserve, which suggests that the hit to output from a spike in economic uncertainty fades after a few months.All good economists remain vigilant. Higher interest rates may have a delayed impact on growth. Escalation in the Russia-Ukraine war or the Red Sea could provoke another round of shocks to energy supply, feeding into inflation. All bets are off if Xi Jinping decides to move on Taiwan. Yet on the flipside, falling inflation and a potential boost to productivity from generative AI could prompt GDP to accelerate. And the global economy has already demonstrated its resilience. Polycrisis, what polycrisis? ■ More