Julie Su Re-Nominated as Head of DOL

Nominees who have not yet been confirmed must be resubmitted at the beginning of any calendar year.



President Joe Biden re-nominated Julie Su for Secretary of Labor on Monday. Su has been acting secretary of Labor since March 2023.

Su’s nomination passed through the Senate Committee on Health, Education, Labor and Pensions in April by an 11 to 10 vote. Her nomination then stalled in the Senate, and a full vote was never held. Presidential nominations must be renewed at the start of a new year.

Her tenure of Secretary of Labor in California was criticized by Republicans at that hearing, especially the state’s unemployment program and a new independent contractor definition rule that she implemented in California.

In September, Senate Republicans introduced a bill, the Advice and Consent Act, which would require nominees to step down 210 days after their nomination if they have not been approved. A vote has not yet been held on that legislation.

After the Department of Labor’s retirement security proposal—sometimes called the fiduciary proposal—was proposed on October 31, some commenters argued that the DOL does not have the authority to finalize rules under an acting secretary. A letter from the American Securities Association stated that “If the proposals are approved by Julie Su, who is purporting to be the Acting Secretary of the DOL, they will be void and unenforceable because Ms. Su was not confirmed by the Senate as required by the Appointments Clause.”

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Under current law, it is unclear what authorities an acting secretary possesses. An opinion issued by the Government Accountability Office argued that if the Secretary of Labor resigns, as Julie Su’s predecessor Marty Walsh did, then the deputy secretary “shall perform the duties of the Secretary until a successor is appointed.” Su had previously been confirmed as Deputy Secretary of Labor.

Hearings to re-consider Su’s nomination have not yet been scheduled.

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Why Consider AI Stocks, What to Be Aware of, per Morningstar

Risks and opportunities exist in machine learning for investors who want exposure.



With artificial intelligence playing an increasing role in many businesses, Morningstar Inc. has laid out opportunities and risks for allocators who want exposure to AI stocks.
 

“Artificial intelligence, or AI, has become far more sophisticated in recent years, creating both disruption and opportunity,” stated Morningstar’s 2024 wealth outlook report. “It brings risk, but there will be winners. We seek to support investors in their understanding of this space.”  

According to Morningstar data, AI semiconductor companies generated $47 billion in revenue, and AI software companies generated $68 billion in revenue in 2023. Morningstar expects these numbers to grow to $143 billion and $137 billion, respectively, by 2027.  

AI Ideas for 2024 

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According to Morningstar, there is opportunity in the “next rung” of AI adopters, even without focusing on the big AI players. The report recommended investors avoid high valuations, which are common for many of the top tech and AI companies at the moment. Instead, Morningstar pointed to smaller firms that can strengthen their products with AI and do not have such valuation risk. “As competition rises, we could see disappointments,” Morningstar analysts wrote, noting that overvalued AI stocks may not perform as well as up and coming competitors.  

According to the report, the 10 tech and AI stocks most commonly held in big-data exchange-traded funds and mutual funds globally are the so-called Magnificent Seven stocks, plus a few more: 

  • Nvidia Corp.;  
  • Microsoft Corp.;  
  • Alphabet Inc.; 
  • Amazon.com Inc.;  
  • Advanced Micro Devices Inc.; 
  • Tesla Inc.; 
  • ServiceNow Inc.;  
  • Meta Platforms Inc.; 
  • Taiwan Semiconductor Manufacturing Co.; and  
  • Snowflake Inc. 

Risks in AI 

Morningstar’s report also listed several potential risks when investing in AI.  

Regulation and Safety – AI companies are under scrutiny from governments and regulators around the world. These regulators have concerns about data, privacy and copyright issues. Regulations will likely be regional, and big policy changes are likely to be implemented in 2025.  
Valuation – “Even fast-growing businesses can be poor investments if investors overpay for shares,” Morningstar’s analysts wrote. “It’s also important to keep in mind that the largest portion of a growth company’s value is derived from cash flows generated many years in the future. Companies that develop durable competitive advantages are more likely to sustain long-term free cash flow growth and could warrant richer valuations. …. A lot has to go right for the primary AI stocks to continue to deliver, which could happen, but the risk-to-reward can deteriorate if investors overpay.” 

Concentration – Investors should acknowledge the uncertainty AI brings when considering position sizes.  

Obsolescence – Some companies’ products and services could become obsolete or less relevant because of AI. Some AI companies could fall behind, as not every firm has the resources to build large foundation models, as OpenAI and others are doing.  

Related Stories: 

Will AI Compromise Security for Institutional Investors? 

Asset Managers Ponder Investments in AI as Security Risks Compound 

How Asset Managers Can Harness AI to Boost Profits, per EY 

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