US Job Market Stalling? Recession Fears & Meta's AI Ad Revolution

Meta's News and the Impact of AI on Advertising

• Meta's advertising, its lifeblood, is set to further evolve under the leadership of AI. In the AI era, advertising businesses have emerged, and Meta plans to fully promote this in the future.

• By the end of next year, Meta aims to allow any commercial brand to use AI-produced advertising content from scratch and achieve automatic posting. Advertisers will only need to provide product images and budget, leaving the rest to AI.

• Zuckerberg has emphasized the future of Meta is to simplify advertising. AI will be more knowledgeable than merchants in targeting the right audience. From this year to next year, Meta will focus on scaling up AI investment tools.

• Currently, Meta's advertising platforms have some AI capabilities like adjusting existing ads and optimizing investment strategies. Next, they will expand to AI-generating ads, designing images, videos, writing documents, setting up investment groups, and giving budget suggestions, with ads accurately presented on Facebook and Instagram.

• Meta's goal is not only advertising automation but also promoting advertising personality. For example, car ads can be adjusted based on user location. This is a hot topic in the advertising industry, similar to Google's Vio3 and Runway platforms that can produce high-quality videos from text.

• Small and medium-sized enterprises can now bypass expensive production teams and use AI to generate full-length ads. Reduced business costs may lead to more effective AI investment and higher unit prices paid to advertising platforms.

Challenges and Competition for Meta's AI Advertising

• However, Meta's new tools require significant algorithmic support and creating customized models for each brand. Large-scale brands are conservative about giving creative leadership to Meta, fearing AI-created ads may not be exquisite enough, lack brand flavor, and may cause controversy. There are also concerns about compensation if ads dissatisfy consumers.

• More and more third-party AI platforms are competing for this market. MidJourney, for example, is already used by many brands to generate advertising materials, which are then posted on Meta's platform. Meta is studying integrating these tools into its advertising system.

Aji's View on AI-Generated Ads

• Aji believes AI-generated ads are a fast transformation method. Doubts about AI's creative ability in ads have decreased since Google Veil 3 came out, with many realistic videos. The main risk is still a matter of responsibility. If Meta is responsible for its AI-designed ads, it could be a business model change.

Other Economic News

Market Movements

• Today, the market is in a small wave. There was a 0.32% rise, and Yelp 500 rose by 0.01%. However, the Dow fell by 0.22%. The block is also divided. Communication service leaders rose by 1%, while energy and public services leaders fell by more than 1%.

ADP Data and Employment Market

• This morning, shocking ADP data was released. In May, the US private sector increased only 370,000 positions, far below the expected 130,000, creating the lowest value since March 2023. This intensifies market concerns about US employment, indicating rapidly weakening employment mobility.

• Employment in the commodity - end was weak, with 2,000 jobs reduced. Manufacturing and mining sections reduced 3,000 and 5,000 jobs respectively. Construction was stable with 6,000 job growth. The service sector added only 3.6 million jobs, with leisure housing and finance contributing almost all. Professional and commercial services, education, medical care, and transportation fell.

• Recruitment of small enterprises was significantly suppressed, with under 50 companies losing 130,000 positions. Large-scale enterprises also weakened, with over 500 - employee companies reducing to 3,000 positions. Only medium-sized enterprises were expanding. Fortunately, migrant workers' salary increased by 4.5% and job seekers' by 7%.

• The labor market still shows some resilience, but it also reflects caution. Employees' job - changing impulse is weakening, and employment market activity is declining. After the ADP report, Trump pressured the US to remove Powell immediately, but the Supreme Court has declared the President can't easily remove members of the US Senate, so Trump's remarks are mostly his own statements.

Indy and US Independent Enterprise Alliance Investigations

• Investigations by Indy and the US Independent Enterprise Alliance also show that recruitment wishes and position releases generally have a weak trend. The employment market is in an extreme stagnation state, and if this continues, it may completely freeze.

Fed Data and Expectations

• The most decisive impact will be the big Fed data to be announced this Friday. The market expects 130,000 for the big Fed, an unemployment rate of 4.2%, and an interest rate of 0.3%. An unexpected rise in the unemployment rate may re - initiate market panic.

ISM and S&P Service Industry Data

• ISM announced the PMI data of the service industry in May. The service industry PMI is only 49.9, lower than expected 52.2 and April 51.6, the lowest since June last year and the first drop in the shrinkage interval. The new order index dropped from 52.3 to 46.4, a new low since December 2022, indicating weakening demand. The price index rose from 65.1 in April to 68.7, the highest since November 2022, with tariffs being a key factor.

• S&P's May PMI index is 53.7, higher than expected and April's 50.8, showing the service industry is expanding rapidly. This rise is attributed to new orders and a more stable business environment. However, overseas sales have been declining for two consecutive months, related to US trade policy. S&P economists say service has improved and corporate confidence has increased, but it's on a low basis, and the judgment of economic slowdown has not changed.

• The difference between ISM and S&P data is that when US domestic demand is stable but foreign demand is unstable, S&P is stronger. The service industry's sample in S&P is more biased towards modernized companies with more stable domestic demand, which may be related to the AI wave, while traditional services have felt demand decline.

US Treasury's HEPI Book

• The US Treasury's HEPI book is an important reference in the interest rate decision. This time, it warns of an economic slowdown, low employment, and high prices.

• The US economy has fallen slightly. Half of the 12 regions under the US Treasury have seen economic activity drop slightly to moderately. Three regions say the situation has not changed, and three have increased slightly. Almost all regions mention rising uncertainty on both the economic and policy sides, making enterprises and families more conservative.

• The manufacturing industry has fallen back a little. Consumer consumption is more complicated, with most areas saying it remains stable or slightly declining, but some areas have noticed increased consumption of products affected by tariffs. In real estate, new houses have little movement, and most new residential projects are stopped or slowed down. Bank loan needs and corporate capital spending feedback are half and half. Port business is good, but other transportation and warehouse activities are fragmented.

• In the employment market, overall recruitment is basically unchanged. Most regions say employment is stable, three have a slight increase, and two have a slight decline. Employee离职率降低, and there are more job applicants. However, enterprises are more cautious in recruitment, with many areas mentioning reduced work hours, less overtime, and some companies even suspending recruitment and starting to lay off workers, though layoffs have not spread. Wages are still rising, but the growth rate has slowed, and the rise in living costs is still pushing wages up.

• Prices have been rising moderately recently, but many expect future costs and prices to rise faster. The impact of tariffs has been mentioned by all regions, and many companies feel the pressure of cost increase. Different companies have different strategies to deal with it, but most say they will transfer the cost within three months.

Oil Production and Price

• Shutter is determined to raise production prices, which may put more pressure on oil prices. Shutter is pushing OPEC Plus to continue accelerating production in the next few months to regain lost market share.

• OPEC Plus has agreed to increase production by 41.1 million tons per day in May, June, and July, but Shutter thinks it's not enough. Experts say Shutter hopes to maintain this pace at least until August or September. At the last meeting, the Russian side was worried about price collapse if production was too fast, but Shutter's claim prevailed.

• Before the last meeting, the Ministry of Internal Affairs discussed being more aggressive than 411,000 barrels. Now, the eight self-employed members of OPEC Plus are recovering 2.2 million tons of production per day according to the plan. If this acceleration mode is maintained, production will be fully recovered by the end of September, a year earlier than the original plan.

• For consumers, low oil prices can ease inflation and relax banks in various countries, but it's not so friendly for oil producers. Russia's oil revenue fell to its lowest point in the past two years in May. For investors, the drop in oil prices can reduce the threat of inflation and support the decline of the US - China alliance. However, there is a difference between Russia and Saudi Arabia, and it remains to be seen if future production can be as smooth as expected.

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Conclusion

• That's all for today's content. If you find the video helpful, please like it. Continuous output is not easy, and Aji needs your support. Thank you.