Published By Banyan Hill Publishing | | | | Published By Banyan Hill Publishing | | | | Will the Fed Pause Rate Hikes Next Week? By Charles Sizemore
Chief Editor, The Banyan Edge | Banyan Nation, We’re in a labor shortage — for which we likely need artificial intelligence and automation technology to fully escape.
And yet, there are signs that the job market may be starting to soften. Unemployment claims came in at 261,000 this week, which was up 28,000 from the week before. As recently as September, claims were coming in at just 180,000 per week.  (Click here to view larger image.) Now, we should put this in context. In the years before the pandemic, a weekly reading of 261,000 wouldn’t have been considered particularly high.
This is still a remarkably tight job market, which is a testament to both the resilience of the post-pandemic economy and the slow growth of the labor force, due to demographic reasons.
But with unemployment now trending higher, the overall labor picture is slowing down a little.
That’s not necessarily a bad thing. The labor shortage is a major driver of inflation. So a mild cooling here will help the Federal Reserve get at least a little closer to its goals. And the more inflation cools, the more leeway the Fed has to stop raising rates.
And about that…
The CME’s FedWatch tool is currently forecasting a 75% chance that the Fed pauses rate hikes at next week’s meeting.
I’m not so sure about that. The Bank of Canada surprised investors by opting to raise rates this past week, and I wouldn’t put it past Fed Chairman Jerome Powell to do the same.
At any rate, the mild bump in unemployment notwithstanding, we know that the real solution to the labor shortage is harnessing the power of AI to make workers more productive. And on Thursday, Mike Carr announced his new project of integrating AI into his Trade Room for smarter investing.
And if you’ve been reading The Banyan Edge, you’ll know that our resident tech market expert, Ian King, is tapped into this mega trend. He’s focused on the technology behind AI software: microchips.
🔥 Investing Edge:  To learn about investing in the emerging tech that’s invading virtually every sector of the market — watch Ian’s free webinar here.
But while we plan to profit from the AI revolution, we’re also not jumping in blindly.
Ian and Mike are extremely selective in how they play this trend. And on Friday, Adam explained how the monster rally in the Nasdaq this year, driven by indiscriminate buying of anything AI-related, could result in a short-term reversal of the Nasdaq 100’s gains.
The opportunities are out there. We just have to be selective and pick our moments!
And on that note, let’s dive into the highlights for this week in The Banyan Edge. | | | It has a code name within the walls of Apple’s Cupertino headquarters — “Project Titan.” Supposedly one of Steve Jobs’ final projects … a new electric vehicle (EV) that would do for the automotive world what the iPhone did for personal devices. The next generation of EVs, including Project Titan, will get their power from a battery the size of your iPhone. Click HERE for the full story. | | | - Elon Warns: “Anvil” Coming to Commercial Real Estate
The office sector is toast. A major San Francisco office tower was just sold for 78% below its 2019 value, effectively resetting the entire sector.
Over the next three years, $270 billion per year in commercial real estate loans will need to be refinanced. This is a minefield for the regional banking sector … and a potential profit opportunity for us.
- “God Chip” Stock of the Year?
You can’t have AI without microchips (semiconductors). However, not all chips are created equal.
There are three major kinds: logic chips, analog chips and memory chips. The most sophisticated of these — and the most important for the AI revolution — is logic. But which company is closest to creating the “God chip,” or the holy grail of chips?
- Buffett’s Oil Secret
The Oracle of Omaha, Warren Buffett, continues to back the truck up on oil. And his reasoning is simple enough: The supply and demand balance suggests oil prices are going sharply higher in the years ahead.
About 97% of the cars on American roads are still gas-powered, and 90% of all new demand for crude oil is coming from emerging markets that have no intention of slowing down.
- Test This AI Strategy With Me?
Traditional trading strategies are based on past market action. But AI strategies are different. They forecast the future. Unlike human traders, who are limited to what they can see, AI models can find hidden patterns and then test them for you.
The opportunities here are limitless … and we’re just getting started. Mike Carr is working on a new project to integrate AI into his Trade Room for smarter investing.
- Why AI Hype Might Kill the Nasdaq
At this point in the hype cycle, it seems like everything even tangentially AI-related is catching a monster bid. That’s naturally going to benefit the tech-heavy Nasdaq 100.
But against the backdrop of one of the fastest tech rallies in history, we must ask an important question: Has the current hype cycle in AI gotten “over its skis” … and will an eventual cooling-off take the Nasdaq’s 2023 gains down with it?
Adam O’Dell provides your hedge for a future reversal in the Nasdaq.
| | | Stay Tuned for the Monday Pod! 🎧  (From FC Barcelona: Lionel Messi.) If you’re a sports fan, you might have heard the news that Argentine soccer legend Lionel Messi is coming to America, to play for the Inter Miami soccer club.
For those unfamiliar with soccer, Lionel Messi is the equivalent of a Michael Jordan, a Tom Brady or a Barry Bonds. Messi is one of those once-in-a-generation talents and a legitimate contender for the GOAT — the greatest of all time.
A move like this is going to have winners and losers. And to help me sort through all of this, Money & Markets’ Chief Research Analyst Matt Clark will be joining me on Monday’s episode of The Banyan Edge Podcast.
Matt is a walking encyclopedia of both sports and market knowledge, so you’ll want to tune in to this one!
Until then,
Charles Sizemore
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