Short-term pain, long-term gain.

That’s the forecast for gold.

Unpacking this, let’s begin with the short-term pain.

Those losses accelerated following President Trump’s reelection. Behind this is a daisy chain of market repositioning anchored in one central assumption…

Trump = increased inflation and government spending.

On the campaign trail, Trump said a lot of things. Two of the most significant comments from our economy’s perspective are that he’ll lower corporate taxes from 21% to 15%, and he’ll deregulate, removing much of the bureaucratic clutter that bogs down markets.

Now, the likely impact of this is a surge in business/growth. While that’s a good thing, the market fears that such a surge will apply upward pressure to inflation.

Meanwhile, Trump’s proposed implementation of new tariffs on Chinese and European goods adds to this fear. A tariff, which is intended to protect U.S.-based companies, increases the cost of foreign goods imported into the U.S. For U.S. consumers who continue to buy those imported products, this is inherently inflationary.

So, the market is looking at the prospect of an economy juiced by lower taxes and deregulation, along with a fresh slate of tariffs, and concluding, “there’s no way inflation remains where it is today. It’s headed higher.”

In response, the market has been selling bonds (which drives prices down, sending yields up), and pushing the U.S. dollar higher.

And do you know what gold hates?

Higher treasury yields and a stronger dollar.

Higher treasury yields make gold look far less attractive since the yellow metal offers no such cash flows. This causes some investors to rotate out of gold to take advantage of the higher income payments from bonds.

Meanwhile, a strong dollar is also a headwind for gold’s price. This is because, all things equal, it requires fewer of today’s strong dollars to purchase the same amount of gold that it required with yesterday’s weaker dollars. “Fewer dollars needed” means a lower price for gold in those stronger dollars.

These are robust headwinds for gold, helping explain the gains reversal in recent days.

But the flip side of why gold is pausing today explains why gold will be rallying tomorrow. 

Before we get to the “global” part, let’s begin here at home.

Earlier, I noted how Trump plans to lower corporate taxes from 21% to 15%. He’s also likely to make permanent the tax cuts from his 2017 Tax Cuts and Jobs Act. Together, this represents an enormous drop-off in government revenues.

Meanwhile, Trump has proposed deporting millions of illegal immigrants. While we don’t know the exact cost (when asked, Trump said “it’s not a question of a price tag”), it’s safe to assume it won’t be cheap – nor will the rest of Trump’s spending initiatives.

In fact, according to the Committee for a Responsible Federal Budget, based on his stated plans, Trump’s presidency is projected to add $7.75 trillion to the deficit over the next decade. The combo of “less money in” and “enormous money out” isn’t great for our nation’s financial health.

Keep in mind, this comes at a time when our nation already can’t live within its means. Our fiscal deficit – which measures how much more our government spends than has collected in taxes – clocks in a $1.83 trillion so far in fiscal year 2024. This is a record.

So, what will happen?

Now, this debt can come from borrowing from public or financial institutions, or it can come from “open market operations” in which our government increases its money supply.

Unfortunately, our government has been engaging in open market operations for decades, which means money printing. And as you know, all things equal, more money supply erodes the purchasing power of that money supply.

Below is a chart of our nation’s money supply (M2 money stock) since 1960.

Notice two things:

• One, its curve, which is beginning to grow exponentially (dotted red line).
• Two, even though M2 fell in recent years when the Fed took steps to remove liquidity from the system after the explosion of pandemic-related money supply, M2 is now climbing again (solid red line in the red circle).

As far as the purchasing power of your savings goes, this is an enormous red flag…and gold is one of the best defenses we have against it.

Home prices have become so expensive that they’ve priced out loads of would-be homebuyers, right?

Yes, when viewed through a “dollar” lens. No, when viewed from gold’s perspective.

Back in March, we highlighted gold’s ability to protect purchasing power by comparing it with real estate over the last 100 years. The specifics are slightly dated (gold and home prices are higher today than back in March), but you’ll get the point.

From that Digest:

The average price of gold in 1920 was $20.68 per ounce. Today, it’s worth roughly $2,100 per ounce. That’s a 100x increase.

Meanwhile, in 1920, the average house price in the U.S. was between $5,000 and $6,000. In 2023, it was $492,000. That’s in increase of roughly 80x – 100x.

Pretty evenly matched, right?

Well, what’s not evenly matched is “dollars then” versus “dollars now.”

Guess how many dollars you’d need today to equal the spending power of $100 in 1920.

Ready?

$1,576.50.

That’s a 94% collapse in dollar strength in 104 years.

The U.S. isn’t the only nation that is fiscally irresponsible. Here’s the International Monetary Fund from last month:

Global public debt is very high.

It is expected to exceed $100 trillion, or about 93 percent of global gross domestic product by the end of this year and will approach 100 percent of GDP by 2030. This is 10 percentage points of GDP above 2019, that is, before the pandemic…

Future debt levels could be even higher than projected, and much larger fiscal adjustments than currently projected are required to stabilize or reduce it with a high probability…

Past experience suggests that debt projections tend to underestimate actual outcomes by a sizable margin. Realized debt-to-GDP ratios five-years ahead can be 10 percentage points of GDP higher than projected on average.

Global debt is one reason why global central banks have been making record-setting gold purchases in recent years. According to BullionStar, banks set a purchasing record in 2022 (1082 tonnes of gold), nearly topped that amount in 2023 (1037 tonnes), and here in 2024, we’re on pace to set a new all-time high.

Here’s MarketWatch:

Gold prices are rising because central banks are buying — likely diversifying away from U.S. Treasurys amid worries about the U.S. fiscal situation [says] Torsten Slok, chief economist at Apollo Global Management…

Central banks remain the “biggest story” for gold over the last two years, said Joe Cavatoni, senior market strategist at the World Gold Council.

Bottom line: Our world is drowning in debt. Global central banks see this and are actively loading up on gold reserves with one hand, while putting their finger on the money printing press with the other.

In the short-term, we’re likely to see continued headwinds for gold. Beyond rising treasury yields and a strengthening dollar, this is happening because investors are cannonballing into risk-on assets.

Gold, as a defensive asset, is seeing heavy outflows. Investors should prepare for a continued breather.

But the financial situation for our nation – and the world – is horrendous and growing worse. More debt spending is coming… more currency debasement is coming… and we haven’t even discussed the potential for the geopolitical conflict that could be coming (supportive for gold’s price).

Here’s our takeaway:

Yes, get into top-tier AI stocks… yes, look at quantum computing, robotics, nuclear, and the rest of tomorrow’s next-gen trends… yes, position yourself for the Trump trade (on that note, here’s how legendary investor �������°� is doing that) …

But don’t overlook gold. As far as the purchasing power of your savings goes, it’s a financial life-preserver in a time of heavy debt spending, inflation, and currency debasement. So, if we see some substantial selloffs in the coming weeks, view it as the opportunity that it is.

Have a good evening,

Jeff Remsburg

The post Take Advantage of Gold’s Selloff appeared first on InvestorPlace.

So, today, I want to share a special essay from InvestorPlace CEO Brian Hunt, where he’ll review the implications of a Trump presidency and what it means for investors. Specifically, he’ll share three factors that should drive stocks higher. Check it out below.

Thank goodness.

It’s finally over.

The most divisive presidential election of the century is over…

… and Donald Trump is the winner.

You may think he’s a bad choice. You may think he’s a great choice. Or maybe you’re somewhere in between.

No matter how you feel about him, Trump is headed to the White House. And we need to talk about what that means for your wealth. 

His win has major implications.

In this essay, I hope to show you these implications and explain why there’s a lot at stake for you and your family. There are a lot of opportunities in the years ahead… and a lot of dangers.

The key takeaway here is:

I believe the Trump victory will lead a big rise in the stock market. 

This means we need to be long stocks. We need to be very long. We could get one of the best three-year periods for stocks in U.S. history… which could significantly increase the value of your 401(k) if you’re positioned to capitalize on the bull market.

Three factors should drive stocks much higher from the current levels.

More Government Stimulus 

Trump knows more about what stimulates the economy and stock market than any past president. 

He’s a real estate developer and entrepreneur. He comes from the business world, not from state government or the military like so many past presidents did.  

He knows that low interest rates and government spending spur economic growth over 2-to-4-year time periods.

Interest rates determine the cost of borrowing money in the economy. The cost of borrowing money is a major part of almost every big business initiative. 

So, falling interest rates stimulate the economy by making it easier and cheaper for businesses to borrow money and fund new projects. 

These projects can come in dozens of forms – including new factories, real estate developments, ports, highways, communication networks, technology businesses, oil and gas projects. The list goes on and on.

All of it leads to job creation and revenue surges for the businesses involved. Again, Trump knows this as well as any politician in history.

More Government Spending

We all know the government can spend wastefully. But the money it spends doesn’t fly up to money heaven. It gets recirculated back into the economy. It gets redirected… much like how engineers can redirect rivers.

Money leaves the taxpayer’s bank account (either directly via taxation or indirectly via monetary debasement) and then gets redistributed across areas the government deems worthy of massive investment. 

Much of the money gets sent directly to individuals and companies that spend the money in predictable ways. Think Social Security, Medicare, Defense Contractors, Infrastructure, Health care, Energy programs, etc.

These are some of the biggest, richest money flows on the planet. Even relatively small government spending programs are monstrous compared to spending by private business.

The money the government spends does not disappear. It massively stimulates many businesses and industries. Some businesses get buckets of money rained on them.

Trump knows this powerful fact about the economy just like he knows about interest rates. Like lower interest rates, this is a lever he will pull over and over.

Trump’s big ego is world famous. His image and his legacy are important to him. He wants to go down as a president that presided over a booming economy. And he’s going to use the two levers I just described to make it happen. 

So, get ready for lower interest rates and full throttle government spending.

Leave Your Philosophy at the Door

You may be asking if all this is short-term thinking that will spur inflation. I believe it is short-term thinking. And I believe it will cause the economy to overheat and generate inflation. But most people don’t understand how inflation works, and Trump will bank on economic growth and its side effects (job creation, business creation, rising stock market) getting more press than the inflation.

You or I might philosophically disagree with Trump “juicing” the economy with lower interest rates and increased government spending. But when it comes to making money in stocks, what you or I like or want philosophically doesn’t matter. 

If you want to make money in stocks, leave your politics and your philosophy at the door. Focus on what makes stocks go up and down… not what makes your emotions go up and down.

The Second Factor: Extraordinary Innovation

The second factor that will likely drive the stock market much higher under Trump is extraordinary innovation.

As I write this, the world is changing at the fastest rates in history… and this blistering rate of change is getting faster every month.

This is because after years of advancing at relatively modest rates, our computers are now advancing at mind-blowing exponential rates. 

Every year, our computers get much faster and much more powerful while also getting cheaper and smaller.

This trend has massive implications for our entire economy. It means new industries are being created at light speed… while demolishing old businesses at the same pace. 

One month a powerful 50-year-old company is a dominant player. The next month, it’s on the road to bankruptcy. 

Exponential progress is giving life to huge new innovations like artificial intelligence, advanced robotics, autonomous cars, personalized medicine, and new forms of space travel.

Thanks to the blistering pace of innovation…

• The market value of electric vehicle leader Tesla (TSLA) has climbed by 1,048% over the past five years.
• The market value of AI semiconductor leader Nvidia (NVDA) has climbed by 2,493% over the past five years.
• The market value of AI data center infrastructure firm Vertiv (VRT) has climbed by 951% over the past five years.
• The market value of Facebook parent Meta (META) has climbed by 480% over the past two years.
• The market value of AI firm Palantir (PLTR) has climbed 376% over the past 12 months.
• Bitcoin (BTC-USD) has climbed 667% over the past five years.

The list of innovation-powered mega winners in the stock market over the past five years goes on and on and on. The tech world is booming and opportunity is everywhere.

This is thanks to exponential progress, which makes it so that every year, our computers get much faster and much more powerful while also getting cheaper and smaller.

The biggest technological trend of our times is AI. And it’s making it so that we’re living through a time of extraordinary technological advancement similar to the 1990s.

Back to the Future

In the 1990s, three revolutionary technologies – computers, the Internet, and cellular phones – achieved widespread adoption and “converged” to reshape the world and create a historic economic boom. 

These technologies allowed us to make quantum leaps in productivity and efficiency.  

It was an incredible time for tech entrepreneurs, investors, and employees. Gale-force tailwinds of wealth creation were blowing.

The benchmark technology stock index – the Nasdaq – gained 40% in 1995…

… then 22.7% in 1996…

… then 21.6% in 1997…

… then 39.8% in 1998…

… and then an incredible 85.6% in in 1999.

During these boom years, top technology firms like Microsoft (MSFT), Cisco (CSCO), and Qualcomm (QCOM) doubled and tripled in value in just months.

Annual stock gains of 300%-plus were common in the technology sector. 

There was blazing revenue growth all over the economy… driven by incredible innovation in communication networks, software, and computers … leveraged by companies creating brand new industries with massive total addressable markets.

That’s what the 90s bull market was all about. And it sounds very much like the time we are living in right now.

Let’s cover that description of the 1990s again…

… Blazing revenue growth all over the economy… driven by incredible innovation in communication networks, software, and computers … leveraged by companies creating brand new industries with massive total addressable markets.

You’re probably thinking what I’m thinking… and you are right.

Sounds just like today. 

Blazing sales growth generated by the likes of AI hardware and software makers like Nvidia, Super Micro (SMCI), Vertiv, Dell Technologies (DELL), and Broadcom (AVGO). 

Incredible new innovations. Companies creating completely new industries with massive total addressable markets.

Exponential technological progress and its offspring AI are changing the world at ever increasing rates. Changes that used to take 10 years to play out now play out in 2 years. Economic winners and losers are being created at much faster rates than they were 20 years ago. 

AI chip maker Nvidia saw its market value climb 800% from early 2023 to mid-2024. Meanwhile, education firm Chegg (CHGG) – which was hurt by AI – saw its market value plummet by 90% during the same time period.

Keep in mind that AI is the fastest-evolving technology in history. 

The AI of today is more than 10 times better than the AI of a few years ago. 

And the AI of two years from now will be more than 10 times better than the AI of today.

It’s advancing in quantum leaps and bounds every six months.

Exponential progress and AI are giving life to huge new innovations like advanced robotics, advanced batteries, autonomous drones, autonomous cars, personalized medicine, and new forms of space travel.

But if you think the world is changing fast now, know that you ain’t seen nothing yet.

That’s because AI is about to enter what I call The Proliferation Phase.

The Proliferation Phase

As much attention as AI has received over the past year, it actually hasn’t changed many lives. Most people aren’t directly and knowingly interacting with AI applications on their smartphones. 

Sure, it’s been at work behind the scenes at some companies like Microsoft and Google (GOOG), but for the vast majority of people, it’s not a daily feature of their lives like email, Zoom calls, Slack, Facebook, X, and e-commerce are.

That’s going to change soon.

As you read this, more and more “not purely technology” businesses are busy applying AI to increase revenue, make smarter capital allocation decisions, and reduce costs. 

Macy’s (M) is using AI to create shopping assistants. Volvo is using AI monitoring for vehicle maintenance. Starbucks (SBUX) is using AI to speed up its ordering process. Southwest Airlines (LUV) is using AI to help manage its complex flight network. 

And importantly, Apple (APPL) will soon roll out a powerful new form of an AI assistant.

This is the start of the AI Proliferation Phase… where “non purely tech” companies apply AI to increase their revenues and lower their costs.

The AI Proliferation Phase will echo the Internet Proliferation Phase… the era after the internet came online and companies built incredible businesses on top of the internet infrastructure.

I’m talking about Google, Amazon, Facebook, YouTube, eBay (EBAY), Netflix (NFLX), Salesforce (CRM), and hundreds of other businesses built on top of the internet and wireless communications.

In 2024, Facebook reached a market value of $1.4 trillion… Amazon reached $2 trillion… Google $2.3 trillion.

As these tech firms grew into those massive market values, they made their key shareholders and executives some of America’s richest people.

These firms leveraged ubiquitous internet connectivity to generate astronomical wealth.

Once the critical infrastructure of the internet was in place, many of the world’s greatest success stories were built upon it. That was the Proliferation Phase… where the internet achieved mass adoption.

A similar thing will happen with AI.

Now that hundreds of billions of dollars have been spent on AI infrastructure – data centers, AI model training, AI semiconductors – all kinds of businesses can apply AI to improve their bottom lines… and all kinds of businesses will get us directly and actively interacting with AI.

I expect this historic revolution to drive up the profits and dividends of many companies and industries. And importantly, it will play a big role in our third factor… which is investor sentiment.

The Third Factor: Surging Investor Sentiment

Most investment analysts struggle with analyzing and timing waves of investor emotion and enthusiasm. After all, it’s hard to reduce something as intangible as “emotion” down to lines on an excel spreadsheet and run financial models with it.

However, investor sentiment – how people feel about today and what the future holds – plays a giant role in the direction of stock prices.

If people look at what’s happening with their income, their business, and the economy and feel good about it all, they are likely to buy stocks and push prices higher.

If people look at what’s happening with their income, their business, and the economy and feel terrible about it all, they are likely to avoid stocks and make it so prices go sideways or lower.

I believe over the next 36 months, a Trump victory is a major positive for investor sentiment.

For better or worse, many investors believe Trump is good for business and good for stock market investments. They believe he will ease business regulations, lower interest rates, and keep taxes from going up. 

We will see a revival in American optimism… a strong national belief in meritocracy… a strong national belief that better times are on the horizon.

If Trump does all this and big AI developments continue making headlines, we could see a powerful self-reinforcing cycle drive stock prices higher and higher.

People could see the market go up and attribute the rise to Trump’s pro-business policies. 

New reports of amazing innovation will add to the positive environment… which will drive people to buy stocks… which will lead to higher prices… which will drive more enthusiasm for Trump’s policies, the stock market, and technological innovation… which will drive them to buy more stocks… which will drive prices even higher…and so on.

We could see a powerful positive self-reinforcing cycle send the broad market up by at least 50% over the next three years… with some industries registering 100%+ gains over the same time. 

We could very well see one of the best three-year periods for stocks in U.S. history.

Now, you might be thinking, “This sounds interesting Hunt. But the 90s tech boom ended with the 2000 Nasdaq bust. And periods of low interest rates can drive wild speculation in many assets, which led to the 2008 financial crisis.”

I’m thinking about that as well.

Yes, years of low interest rates and wildly bullish investor sentiment could easily cause the economy and stock market to overheat. It could lead to a market crash. We see major market crashes once every 5 to 10 years anyway. 

In the pursuit of making big investment gains over the next three years AND keeping those gains by exiting before a crash, you want to keep an eye on the exit door. 

Signs that the big bull run may be about to roll over will include wildly bullish sentiment, extremely high stock market valuations, and the broad market breaking below its 200-day moving average.

But before any of that happens, we are likely to be in an environment of great opportunity. 

Like him or dislike him, Trump just won a mandate. Business and investors will like it. 

We will enter a new age of American optimism. Position yourself accordingly.

Regards,

Brian Hunt

CEO, InvestorPlace

P.S. As Brian Hunt just explained, this post-election surge is just the beginning of an even bigger opportunity. In fact, I think a Trump Presidency will launch a second boom in AI stocks.

I know you’ll want to be prepared for what’s coming, so I’ve flagged six AI stocks primed for massive gains.

Click here to learn how you can profit.

The post Why the Stock Market Could Double After Trump’s Inauguration appeared first on InvestorPlace.

Now, thankfully, we don’t have to guess how a Trump presidency will impact stocks. We can just look back at how stocks did throughout 2017, 2018, and 2019 to determine how they may perform over the next few years. (Note: we’re excluding 2020 from this analysis due to the COVID-19 pandemic, a unique phenomenon unlikely to repeat in the next four years.) 

So – how did stocks do during Trump’s first term in office?

In short, they soared in 2017 on improved economic growth and lower taxes, then stumbled in 2018 as new tariffs caused reinflation. In 2019, stocks recovered as tariffs eased, inflation fell, and the Federal Reserve began cutting rates. 

And from where things stand today, a repeat of that performance seems quite possible. 

A Lookback at the Era of Trump 1.0

Specifically, in 2017, we saw an immediate acceleration in GDP from 2% to 4.6%. This caused some reinflation, but the market didn’t care much. Economic reacceleration was the story of the year; stocks soared. 

But then the first big batch of tariffs arrived in early 2018 – and everything changed. 

First, there were the 30% to 50% tariffs enacted on solar panels and washing machines in January. Then, in March, we got a 25% steel tariff and 10% aluminum tariff. Those escalated and expanded into June 2018. 

Steel prices spiked by about 50% in the first half of 2018. Aluminum prices jumped around 30%. The entire Bloomberg Commodity Index – a strong gauge of all commodity prices – rose about 10% in the first half of 2018, mostly due to the tariffs increasing prices and stalling global trade. 

And as a result, inflation started to become a problem once again. It rose from ~2% to ~3% in the first half of 2018, which forced the Federal Reserve to get more aggressive with its rate-hiking cycle. Indeed, the central bank hiked interest rates four times in 2018 to fight tariff-fueled reinflation.

Higher prices and higher rates weighed on the economy. GDP slowed from 4.6% at the end of 2017 to 0.6% at the end of 2018. 

The combination of higher prices, higher rates, and falling growth spooked investors and led to a violent ~20% market crash between September and December 2018.

In response to the market volatility and slowing growth conditions, the Fed stopped hiking rates in early 2019. Simultaneously, Trump started rolling back certain tariffs, particularly steel and aluminum tariffs on Canada and Mexico. 

Inflation eased. The Fed cut rates. The economy restrengthened, with GDP recovering to 4.8% by late 2019. And the stock market soared. 

The Final Word on What’s Ahead for Stocks

So… in the Trump 1.0 era… we had a tug-of-war between faster economic growth and higher inflation, with inflation only becoming a problem when big tariffs arrived in 2018. 

That is why investors and economists are so squarely focused on Trump’s tariff policy. There was a lot of talk on the campaign trail about big tariffs. Specifically, Donald Trump wants to institute a 20% tariff on all imports and tariffs of up to 50% to 100% on Chinese imports. If he follows through, we could see a repeat of 2018 (or worse).

But, of course, there’s campaign talk… and then there’s presidential walk. And we find it highly unlikely that those big tariffs are implemented in the Trump 2.0 era.

Rather, we think we will see a scaled-back version of the tariffs we got in 2018 – which should mean less reinflation and less market volatility.

Nonetheless, investors should remain vigilant. 

For now – just like it did in 2017 – the stock market will push higher on optimism for pro-growth policies and lower corporate taxes. 

Pay close to attention to what rhetoric turns into policy. If very little of that tariff rhetoric becomes policy, this market could remain on the launching pad for a few years. 

Learn which stocks we’re considering closely to potentially win big in this market rally.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Market Watch: How Trump’s Tariff Strategy Could Reshape This Rally appeared first on InvestorPlace.

Are oil stocks a “buy” with Trump headed back to the White House?

The kneejerk line of thinking goes, “Trump is friendly to oil… he’ll deregulate… time to buy some top-tier oil plays.”

But if Trump follows through on “drill, baby, drill,” then U.S. production stands to flood the global market. And as you remember from Econ 101, all else remaining equal, an increase in supply puts downward pressure on prices.

So, while drivers at the pump might cheer, will oil company CEOs?

While U.S. producers might add supply to the global market with deregulations, Trump has vowed to put sanctions on Iranian and Venezuelan oil production.

If he follows through, global supply will likely drop by roughly 2.5 to 3 million barrels per day. That’s roughly 3% of global supply. While that might not sound like much, history shows that even a 1%-2% disruption can cause a price spike.

For example, in the 2011 Libyan Civil War, oil production dropped by about 1.5 million barrels per day. That was roughly 1.7% of global supply at the time. Oil prices jumped from around $90 to more than $120 within a few months.

And in 2018, Trump’s sanctions on Iran led to a reduction of about 1 million barrels per day (about 1% of global supply). That helped drive up prices from around $67 to $86.

Bottom line: Prices can be very sensitive to even small disruptions.

If Trump deregulates U.S. production as promised, it could mean somewhere around another 0.5 to 1.5 million barrels of oil per day over the next four years (about 0.5% – 1.5% of global supply). That would offset some of the sanction-based production declines (if Trump goes full bore), but not all.

That would seem to support lower global supply, but China isn’t likely to recognize U.S. sanction on Iran or Venezuela. How would that affect the situation? It depends – is China going to roar with Beijing throwing stimulus dollars around? Or is going to crash into a recession?

But wait, just when you were confused enough, there’s more!

Trump has promised to end the war between Russia and Ukraine. If he’s successful in brokering a truce, to what extent would that ease restrictions on Russian oil?

Removing Russia’s feet from the fire has the potential to add another 500,000 to 1 million barrels per day to the market (call it 1% of the global market).

How does all this net out for supply and price?

Candidly, it’s unclear. Lots of questions. Few answers.

For a yardstick, let’s start with the S&P 500.

As I write, the S&P’s price-to-earnings (PE) ratio is 30.52. For context, the S&P’s average PE ratio is basically half this value at 16.10. Translation – this is an expensive market.

Meanwhile, the S&P 500’s dividend yield is 1.23%. This is barely higher than the S&P’s all-time low yield of 1.11% in August 2000.

With this as our baseline, here are the PE ratios and dividend yields of a basket of oil companies (not all U.S. based):

• Equinor: PE 6.9, dividend yield 5.91%
• Diamondback Energy: PE 10.4; dividend yield 4.57%
• Valero: PE 12.0; dividend yield 3.14%
• Shell: PE 13.6; dividend yield 4.01%
• Exxon: PE 15.0; dividend yield 3.27%

Far more attractive valuations… far more attractive yields.

No, it’s not obvious.

Given the many uncertainties we’ve highlighted above, this isn’t a no-brainer trade. Oil could be in the $50s this time next year. And given that the average price needed for U.S. oil companies to profitably drill a well is $64, today’s price in the upper $60s doesn’t provide much breathing room.

However, if the question is “are top-tier Big Oil stock prices low enough to reward you if you plan to hold 24+ months?” then, yes, the oil patch is offering some attractive, discounted entry prices with fat dividend yields while you wait for price appreciation.

Buying oil today is a gamble, but it’s one that’s likely to pay off for investors with patience.

I’ll let you mull this over in the context of the following quote from billionaire Rob Arnott, founder and chairman of the board of Research Affiliates:

In investing, what is comfortable is rarely profitable.

As I write Monday morning, Gary Gensler is probably updating his resume. If he isn’t, he should be.

Gensler is the Chairman of the SEC, but crypto enthusiasts know him as “Enemy #1.”

In his tenure heading the SEC, Gensler has sued Coinbase (the largest U.S. crypto exchange), as well as Binance, and Kraken… he’s gone after various crypto tokens such as Ripple (XRP), trying to treat them as unregistered securities… and his overall attitude toward crypto has been so adversarial that it’s prompted rebukes from politicians.

Enter Trump.

This summer, when Trump gave the keynote speech at the Bitcoin Conference in Nashville, he said that if he won the White House in November, he’d fire Gensler on Day One. The comment prompted thunderous applause from attendees.

So, what happens now as Trump loads up his U-Haul for the White House?

Well, Gensler’s post does not expire until 2026, but odds are, he’ll step down as chairman. As to who could replace him, here’s CNBC with some three possibilities:

Dan Gallagher, now serving as Robinhood’s chief legal officer and formerly a Republican SEC commissioner, has been floated as a possible replacement.

Another possibility is one of the current Republican SEC commissioners, Hester Peirce, who has opposed most of the new rulemakings and lawsuits that Gensler has initiated…

The other Republican commissioner is Mark Uyeda who has been at the SEC a while, and he may be a choice for either acting chair or chairman.

Whoever it is will be far better received than Gensler, which means bet on higher crypto prices in 2025.

Of course, we don’t have to wait until 2025 for fireworks in the crypto sector…

Last Tuesday, Bitcoin began the day priced at a little over $68,000. But as Trump’s election became likelier, the price skyrocketed.

By 11:00 pm that evening, it was up to roughly $74,600, and it’s continued climbing since. As I write Monday at lunch, Bitcoin trades at $84,720 – roughly 25% higher since last Tuesday.

Meanwhile, the volume has been extraordinary. As you can see below, BlackRock’s Bitcoin ETF, IBIT, just had its largest inflow in history.

So, where are we going next?

Our crypto expert Luke Lango believes we’ll hit triple digits within a few months. From Luke’s recent issue of Crypto Trader:

We think that BTC is headed for $100,000 within the next few months and that altcoins are ready to soar.

The technicals confirm these bullish fundamental observations, with Bitcoin’s technical analysis particularly promising.

Luke isn’t alone in this analysis. The research shop Ned Davis is calling for Bitcoin at $121,000. Here’s MarketWatch:

Bitcoin’s rally to an all-time high [last] Wednesday could open the door for the crypto to reach the $100,000 mark by the end of the year, after the presidential election victory for Republican Donald Trump, the candidate perceived as more friendly to crypto, according to analysts…

Patrick Tschosik and Matt Bauer, strategists at Ned Davis Research, upgraded bitcoin as a long-only trade with a price target of $121,000, based on technical analysis following Trump’s victory.

Keep in mind, we’re only 18% below $100,000. If investor FOMO kicks in as history shows it usually does with crypto, we could hit this milestone before Thanksgiving.

When crypto investors aren’t feeling bullish, they pile into the safety of the big dogs: Bitcoin, Ethereum, Tether, and Solana. But when “risk on” sentiment settles in, that’s when investors fan out, allocating to smaller altcoins. The sector “leadership” moves from Bitcoin and the larger market-cap-weighted cryptos to the small altcoins.

And given how small some of these altcoins are, inflows can result in price fireworks – we’re talking quadruple-digit returns in a matter of just weeks or months. This is what happened back in 2020/2021 when popular altcoins exploded thousands of percent higher.

To be clear, this hasn’t been the case here in 2024. Bitcoin has been sucking up all the air in the room. But Luke believes we’re at a sea change moment where altcoins are going to begin stepping into the spotlight.

Back to Luke:

Now… for the first time in over nine months… the fundamental and technical data is highly supportive of both Bitcoin and altcoins. 

We think cryptos are ready for an Everything Rally into the end of year. 

We should also see more investment vehicles across the space, like ETFs for Solana and other altcoins. We will likely also see more brokerage firms and banks offer their clients access to crypto investing. 

The sum of those dynamics will push more money into the crypto industry, increase demand for crypto assets, and push crypto prices higher…

Could this be when things really get started?

We think so. We’re cautiously optimistic. 

If the crypto sector is following past precedent, you’re going to want to have the leading altcoins in your crypto portfolio. After all, if 2020/2021 taught us anything, it’s that few assets can soar higher, or faster, than popular altcoins when animal spirits strike.

We’ll keep you updated.

Have a good evening,

Jeff Remsburg

The post What Trump Means for Oil Prices and Stocks appeared first on InvestorPlace.

Hello, Reader.

Lemons and blue jeans might seem to have as little in common as a top sirloin and artificial intelligence. But they all share one common trait: a nearly unquenchable thirst.

Each of them owes its existence to spectacular volumes of water.

Growing just one lemon consumes about 13 gallons, while producing one 16-ounce steak requires about 475 gallons of water.

And according to Levi Strauss & Co. (LEVI), producing a single pair of its iconic 501 jeans consumes nearly 1,000 gallons of water.

AI’s water consumption is not as easy to calculate as a top sirloin’s, but it is enormous… and increasing rapidly.

Although AI does not directly consume water, the data centers that power AI technologies do. Most of that H2O finds its way into the cooling systems that prevent data center server racks and components from overheating. The centers also use water indirectly from their electricity use.

On average, an Alphabet Inc. (GOOGL) data center consumes 450,000 gallons of water a day. But some of the newest centers consume 10 times that volume, as do some of the newest semiconductor fabs.

Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) is building a state-of-the-art chip-fab in Arizona that will guzzle 4.75 million gallons of water a day – enough to supply about 1.5 million average homes.

And the nebulous force of “the internet” cannot operate without millions of physical servers humming along 24 hours a day inside the world’s data centers. Thus, these servers rely on and consume prodigious volumes of electricity and water.

And most folks don’t realize how water-intensive GenAI programs like ChatGPT can be. Shaolei Ren, an associate professor of electrical and computer engineering at University of California, Riverside, conducted research to calculate that impact. He and his team observed…

GPT-3 needs to “drink” (i.e., consume) a 500ml bottle of water for roughly 10-50 responses, depending on when and where it is deployed. These numbers may increase for the newly-launched GPT-4 that reportedly has a substantially larger model size.

The tech industry’s large and growing water consumption has not yet attracted the same level of attention – or concern – as the industry’s growing energy consumption. But as tech companies expand their data center footprints worldwide, water consumption will become an increasingly challenging issue for them, and an increasingly expensive one.

But despite the early signs of water challenges, none of the major tech companies are hitting the “pause” button on their data center expansion plans, which means their collective water consumption is on the verge of erupting like “Old Faithful.”

Google’s water consumption, for example, jumped 17% in 2023, compared to the year before.

Synergy Research Group predicts worldwide hyperscale data center capacity will almost triple within the next six years. The expanding number of new facilities will account for some of that growth, but the technical evolution from CPUs (central processing units) to GPUs (graphics processing units), like the ones Nvidia Corp. (NVDA) produces, will deliver most of that capacity boost.

GPU servers have become the industry standard for data centers. They deliver vastly superior performance for AI-related processing than the legacy CPU servers that most existing data centers use.

Inconveniently, GPUs consume about four times more electric power than CPUs, which means they also generate significantly more heat than CPUs. Furthermore, as AI technologies become more widely adopted, they will require ever more data centers with ever more powerful processors.

Consequently, data center cooling systems must become more robust. Water-cooled systems are the obvious choice. Air cooling can do the job in some cases, but because water’s thermal capacity is 3,000 times higher than air’s, it can absorb more heat than air, using less energy and at lower cost.

To be clear, the data center industry will not cause any immediate harm to the global water cycle.

The industry’s collective water consumption has not yet risen to alarming levels. But the more stressed the world’s water supplies become, the greater the likelihood that water costs will rise for the data center industry.

This relationship is just starting to create compelling opportunities for investors. In fact, I recently recommended an emerging leader in the water-handling business for the oil & gas industry to my Fry’s Investment Report subscribers.

I believe this company is in an excellent position to capitalize on a powerful opportunity that will continue to gain momentum. To learn more about this recommendation, join me at Fry’s Investment Report today.

Now, let’s look at what we covered here at Smart Money this past week…

Smart Money Roundup

My Urgent Election Debrief

After last week’s election results, I recorded a message for investors. I want to assure you not to get overly caught up in the historical connections between politics and financial markets. While political factors can influence markets, I believe the most important thing is to focus on the dominant market trends of the moment.

What a Trump Presidency Means for U.S. Chip Manufacturing

Intel finds itself running for its life, struggling to keep up with competitors like the hare chased by hounds in an old Aesop fable. The Biden administration passed the CHIPS and Science Act in 2022 to help America’s last high-end chipmaker, but with Donald Trump returning to the White House, that plan is now uncertain.

This Industry Is a “Buy” for the Next Few Years – Here’s Why

With Donald Trump on his way back to the White House and Republicans retaking control of the Senate, the president-elect will likely be able to implement his economic agenda with minimal opposition over the next two years. This has significant implications for the U.S. economy and financial markets, so you are probably wondering what sectors will thrive over the coming years. I believe that this industry will.

Behind the “Trump Bump”: How Much Could Stocks Rise in 2025?

We observed two forms of the “Trump Bump” during Trump’s first term, according to InvestorPlace analyst Luke Lango. They include a boost for corporate earnings through more pro-growth policies and tax cuts, and a rise in valuations thanks to increased investor confidence in the economy. In Sunday’s guest issue, Luke breaks down these two factors and the pathway he sees for the election-driven rally to push stocks higher in 2025.

Looking Ahead

In your next Smart Money, I will continue to examine data center water consumption in the context of global trends… and highlight a U.S.-listed company that is recognizing the growing opportunity – and attempting to capitalize on it.

Regards,

�������°�, Smart Money

The post AI’s Unquenchable Thirst and the Opportunity It Brings appeared first on InvestorPlace.

This Week’s Ratings Changes:

Upgraded: Buy to Strong Buy

Downgraded: Strong Buy to Buy

Upgraded: Hold to Buy

Downgraded: Buy to Hold

Upgraded: Sell to Hold

Downgraded: Hold to Sell

Upgraded: Strong Sell to Sell

Downgraded: Sell to Strong Sell

To stay on top of my latest stock ratings, plug your holdings into Stock Grader, my proprietary stock screening tool. But, you must be a subscriber to one of my premium services. Or, if you are a member of one of my premium services, you can go here to get started.

Sincerely,

�������°�

The post Weekly Upgrades and Downgrades appeared first on InvestorPlace.

A boost for corporate earnings through more pro-growth policies and tax cuts, and a rise in valuations thanks to increased investor confidence in the economy.

He expects that stocks will boom in 2025 and likely into 2026 on the back of economic euphoria.

He is joining us today to further discuss the “Trump Bump.”

For the past two days, the stock market has benefitted nicely from the so-called “Trump Bump.” 

That is, ever since Donald Trump won the 47^th U.S. Presidential Election – on the premise that his pro-growth policies will benefit the U.S. economy and stock market – stocks have been taking off. 

But how big is the “Trump Bump” really? Is it enough to push stocks 2%… 5%… 10% higher? 

Well, we’ve looked back on the market’s performance during Trump’s first term in office. And in our analysis, we observed two forms of the Trump Bump. 

Clearly, those two factors are net-positive for stocks. And we see a pathway for this election-driven rally to push stocks almost 30% higher in 2025. 

Here’s our math.

Higher Earnings Mean Stocks Should Keep Rising

The first form of the “Trump Bump” – higher earnings – is about a 2% to 4% boost in earnings, before considering tax cuts. That is, from November 2016 (when Trump won his first term as president) to December 2017 (the end of his first year in office), we saw 2017 and ‘18 earnings estimates rise about 2% and 4%, respectively. 

So, it seems Trump’s pro-growth policies were good enough for a considerable rise in earnings estimates during his last term in office. We think that’s achievable this time around, too. 

Meanwhile, there is talk that Trump will also reduce the corporate tax rate from 21% to 15%. Goldman Sachs estimates that if he is successful at doing so, it could result in a 4% boost to earnings per share (EPS) for the S&P 500. 

In other words, the boost to earnings over the next few years will likely be a 2% to 4% bump-up from pro-growth policies and a 4% bump-up from corporate tax cuts. Altogether, that’s a 6% to 8% increase in earnings estimates. 

At the midpoint, that would take the current 2026 EPS estimate for the S&P 500 of ~$303 and make it $325 by the end of next year. 

A Second Term for Trump Will Likely Boost Valuations

Now, the second bump factor – increased valuations – would be about a 10% rise in valuation multiples. 

Throughout 2016 – before Trump took office for his first term – the S&P 500 was consistently trading between 16X and 18X forward earnings. That expanded during Trump’s first year in office, when the S&P consistently traded between 18X and 19X forward earnings. 

In other words, likely due to increased confidence about the economy, investors pushed up valuations by ~10% the last time Trump was elected. 

We think that’s doable this time around, too. Throughout 2024, the S&P 500 has mostly bounced between trading at 20.5X and 22.5X forward earnings. And a 10% boost to that implies a ~23.5X forward earnings multiple for stocks. 

If we combine those two “Trump Bump” factors – a ~7% boost to earnings and a ~10% rise in valuations – then we’re looking at 2026 estimated EPS for the S&P 500 of $325 and a 23.5X forward earnings multiple. That combination implies a 2025 target for the S&P of 7,640 – nearly 30% above where it is currently trading. 

In other words, if Trump’s second term as president plays out like his first (in terms of stock market earnings and valuation impact), stocks could soar ~30% over the next 12 months. 

The Final Word

Of course, if earnings and valuations do rise in such a fashion, the market will have likely run into “bubble territory.” 

That’s what we think is most likely to happen – a classic “Boom-Bust” cycle. 

We expect that stocks will boom in 2025 and likely into 2026 on the back of economic euphoria. Then, something goes awry – maybe reinflation or too much lending; maybe the labor market cracks, or there’s too much AI investment and not enough payback – and the boom turns into a bust. 

That is what happened in Trump’s first term. Stocks boomed 30% higher from January 2017 to September 2018, before nosediving about 20% from September 2018 to December 2018. 

Boom. Bust. 

Something similar is likely to happen this time around – especially if the boom in 2025/26 is particularly strong, as we think it could be, given that the Fed is simultaneously cutting rates and that the AI Boom remains vigorous. 

As such, we think the investment game plan for Trump 2.0 over the next 12 to 24 months is simple: Get fully bullish right now and stay that way for as long as the market keeps trending higher. 

But be prepared to cash out and play defense as soon some things start to break (likely in mid-to-late 2026). 

And with that in mind, we invite you to check out a few of the top stocks we’re watching right now to potentially hit huge returns in this exciting rally.

Regards,

Luke Lango

Editor, Hypergrowth Investing

The post Behind the “Trump Bump”: How Much Could Stocks Rise in 2025? appeared first on InvestorPlace.

On November 6, we finally got our answer… 

Donald Trump will be the 47^th president of the United States of America. 

Half of all Americans are delighted. Trump has promised everything from lower taxes to stricter migration rules, and Congress appears in a position to let him follow through.  

The other half are Googling “How can I apply for Canadian citizenship?”  

But no matter what your political leanings are, the question is, “What’s next?” 

After all, we know that Donald Trump is a disruptor. His years in leadership were marked with some incredible market gyrations (including a 20% market decline in 2018 and a wild V-shaped recovery in 2020).  

The president himself often played a direct role in the volatility. We noted back in 2017, for instance, that Trump helped Boeing Co. (BA) get business and contracts, which the aerospace firm repaid with an under-market-value deal for a newly redesigned Air Force One.  

Boeing lost $1.1 billion on that plane… but shares of BA rose as much as 200% before falling back to earth. 

We also know that Trump cares greatly about the stock market. The Washington Post once called the Dow Jones Industrial Average “Trump’s favorite metric,” and his speeches are peppered with references to how well he’s done for equities. U.S. markets rose 67% under his watch. 

Obviously, this time around looks vastly different from Trump’s first go-around in 2016. Several worldwide conflicts are now raging… the U.S. now produces far more energy than either Russia or Saudi Arabia… conversational AI has been invented… and so on.  

You never step in the same river twice. 

Still, markets have so far acted on Trump’s win with glee. Shares of the S&P 500 have risen 4% since election results were announced. That’s why I urge you to watch InvestorPlace Senior Analyst �������°�’s latest presentation on the stocks he thinks are most likely to boom during a second Trump presidency.  

Plus, I’d like to share five stocks that I believe will do well in 2025 on this newfound momentum. 

The Department of Government Efficiency 

The incoming president has consistently rewarded loyal lieutenants with top jobs, contracts, and preferential treatment. And though you may love or hate me for saying this, that means Elon Musk’s Tesla Inc. (TSLA) will likely succeed. 

Tesla is unusual beast. The tech company has relatively poor earnings quality (it is an automaker, not a software firm), is seeing rising competition (BYD and other Chinese makers), and has a corporate governance structure that should make any Western investor pause.  

Quality-value investors will want to steer clear.  

Yet, the company’s share price seems to magically levitate. Shares have risen 1,150% over the past five years and are now worth $900 billion, or 100-times forward earnings. 

The key to this “wizardry” is Musk’s ability to keep his biggest fans interested. I noted in 2020 that it’s a superpower that’s virtually impossible to replicate, and he’s used this ability to continue raising capital to build ever-more expensive gigafactories. 

A second Trump presidency will expand that capability. Musk has become Trump’s highest-profile cheerleader, and the promise of a Cabinet-level appointment will mean the electric vehicle company’s CEO will gain de-facto access to the federal government’s purse strings… if not its regulatory bodies as well. Financing deals will move ahead faster than before, and approvals for projects like self-driving taxis will be far easier to achieve. 

Of course, Musk could still get burned by Trump (plenty of others have)… and Tesla remains impossible to value by any traditional metric.  

But given the history we know, the most likely direction for TSLA in 2025 is “up.” (Just be sure to sell immediately if Musk and Trump begin falling out.) 

The Energy Plays 

A second Trump presidency means more oil drilling. The former president oversaw an oil bonanza during his first term and has pledged to expand fracking under a second one. 

Playing this boom, however, requires some thought. Dozens of U.S. drillers went bankrupt in 2016 after too much new shale capacity triggered a collapse in prices. A new expansion round might see history repeat itself. In addition, retaliatory tariffs could make America’s liquified natural gas (LNG) exports uncompetitive overnight.  

That’s why I’m making two recommendations in this sector to diversify our bets. 

1. Kinder Morgan Inc. (KMI). America’s largest pipeline firm is also one its most stable. The company has averaged a 23% operating profit margin over the past five years and consistently generates over $3 billion in annual free cash flow. 

KMI’s existence as a pipeline (rather than a driller) gives it a measure of protection against falling prices. The industry tends to charge customers by volumes delivered, so KMI will benefit from greater drilling volumes, even if prices go down. (Longer term profits can decline if too many customers go bankrupt.)  

Kinder Morgan also has a significant domestic business that offers a defense against retaliatory tariffs. The firm operates 66,000 miles of natural gas pipelines (40% of the U.S. network), controls 15% of natural gas storage, and is the largest U.S. transporter of independently refined products. America’s domestic energy industry needs KMI simply to get hydrocarbons from wells to refineries. 

Then there’s the upside. If retaliatory tariffs on U.S. gas exports do not materialize, KMI will benefit handsomely. The firm already handles 7 billion cubic feet per day of exportable LNG, and Morningstar analysts believe this figure can almost double to 13 billion cubic feet in 2025, given the right price. 

That increase would send KMI’s shares skyrocketing. Even before Trump’s win, analysts were expecting free cash flow per share to rise 7% in 2025 thanks to rising spreads in natural gas prices. And given the company’s reasonable 11X forward cash flow multiple (on these lower estimates), don’t be surprised if KMI sees shares rise by 20% or more next year. 

2. Halliburton Co. (HAL). America’s second-largest oilfield-services company offers even greater upside. The Houston-based firm is an essential player in the fracking industry, specializing in the pressure pumping services that bring hydrocarbons to the surface. Analysts at Spears & Associates believe Halliburton handles a quarter of all American frac spreads. 

A second Trump presidency promises to spur greater demand for new wells. The president would likely roll back rules regarding methane emissions, release a half-million acres of Alaskan federal land for drilling, and restart approvals on new LNG exports. All this would be a net positive for Halliburton’s business. Wall Street analysts were projecting a 9% increase in earnings per share even before Trump was elected. These figures will almost certainly get revised up over the coming weeks, increasing the firm’s fundamental value. 

That said, it’s impossible to know exactly how much Trump will be able to influence drilling demand. Energy firms continued to expand production during the 2021-2024 period, despite efforts by the Biden administration to rein in carbon emissions; it’s unclear whether undoing these rules will have much of an effect either.  

Smart investors will avoid smaller players like NOV Inc. (NOV) that have greater downside risk for that reason. 

That’s why I’m favoring Halliburton’s high-earning business. And with shares trading at under 10 times forward earnings, valuations offer significant downside protection in case things don’t go as planned. 

The Bitcoin Kings 

Finally, it’s hard to mention Trump without talking about Bitcoin (BTC), which saw prices rise as much as 7% to $75,000 in the hours after his election win. Crypto enthusiasts have long courted the former president, and speculators are now banking on fewer regulations and less taxes. 

There are admittedly a lot of low-quality companies in this space. I have long worried about Bitcoin mining firms like Riot Platforms Inc. (RIOT) and MARA Holdings Inc. (MARA) because of their high capital expenditures and leveraged exposure to crypto prices. These stocks traditionally go up a great deal before crashing back to Earth. So, I generally avoid these picks despite their potential upside. 

However, two firms stand out for their wider moats and greater staying power: 

1. Coinbase Global Inc. (COIN). The largest U.S.-based crypto exchange is also one of the industry’s most profitable players. Analysts expect Coinbase to generate $1.5 billion of profits this year, a 26% margin. A Trump victory now suggests two things will happen. Firstly, rising Bitcoin prices will likely bring users back to the trading platform, further increasing profits for Coinbase and raising its share price. Secondly, regulatory risks are diminishing. Securities and Exchange Commission (SEC) Chair Gary Gensler sued this crypto exchange last year for allegedly selling unregistered securities; he will now likely be replaced with a more crypto-friendly head who will drop ongoing lawsuits. 

2. Robinhood Markets Inc. (HOOD). The mobile trading app has long thrived on volatility, especially among meme stocks. A second Trump term will likely re-create much of the 2020 excitement around small cryptocurrencies like Dogecoin (DOGE) and others. The replacement of Gary Gensler as SEC chair is also a net positive for Robinhood, which is branching out into less-regulated businesses like 24-hour trading and betting on events. 

These two firms represent the best crypto plays I can currently highlight. Though prices of Bitcoin will remain volatile, these trading platforms will likely thrive on the asset’s widening fanbase. 

Closing Thoughts: The Companies You Most Expect 

There’s often a temptation to overcomplicate investing. The top hedge fund managers spend millions of dollars on buying the best research… hiring the top analysts… and even paying for the occasional illegal insider tip.  

Indeed, investing can sometimes turn into a complex game of knowing more than the market. 

That, however, is not always the case.  

One reason for Donald Trump’s enduring popularity is his relative openness about his intentions. In 2016, he talked about rolling back environmental regulations, cutting taxes, and quickly making it clear he was a transactional person. It shouldn’t surprise many that the Top 5 S&P 500 stocks the year following his 2017 inauguration were: 

• NRG Energy Inc. (NRG): +132% 
• Align Technology Inc. (ALGN): +131% 
• Vertex Pharmaceuticals Inc. (VRTX): +103% 
• Wynn Resorts Ltd. (WYNN): +95% 
• Boeing Co. (BA): +89% 

Besides the two healthcare companies (which often rise due to internal factors), we had NRG benefiting from cheaper energy prices, Wynn rising thanks to significant tax cuts, and Boeing surging thanks to its strong personal connections with the president. You didn’t have to be a hedge fund boss to pick three-fifths of the 2017 winners. 

This time around, Trump has been even clearer about his intent. And though not every campaign promise will be kept, the broad strokes are already plain to see. 

For his part, �������°� is saying that a Trump presidency means a second boom is coming for AI stocks… starting as soon as inauguration day. 

And he has six specific AI stocks in his crosshairs.  

Click here to find out why Louis believes Donald Trump’s election will launch a second boom in AI stocks. 

I’ll see you back here next Sunday.   

Regards,   

Thomas Yeung   

Markets Analyst, InvestorPlace   

Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.

The post 5 Stocks to Buy on a Trump Victory  appeared first on InvestorPlace.

For years, one of the world’s richest men and arguably most influential tech visionary – Elon Musk – has mostly watched the AI Boom unfold from the sidelines. 

But that has all changed.

Musk was set to secure up to $6 billion in funding for his new AI startup, xAI. And he’s done it.

From xAI’s official blog:

Our Series B funding round of $6 billion with participation from key investors including Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal and Kingdom Holding, amongst others.

Now, aside from launching its AI chatbot Grok – which many experts say matches up pound-for-pound with ChatGPT – things have been mostly quiet since xAI’s founding. 

But this $6 billion funding round could change that in a dramatic way. 

Of course, the thing about world-changing businesses is that they start with world-changing people. Those folks have revolutionary ideas. And when funded with billions of dollars, they turn those ideas into world-changing businesses.  

After all, Apple (AAPL) only became what it is today thanks to Steve Jobs, who came up with the idea of the iPhone. Jobs then leveraged the enormous amount of money Apple was making off its computers to create the iPhone. And voila… Apple became a trillion-dollar company.  

Similarly, Microsoft (MSFT) grew into a tech titan because of Bill Gates, who came up with the idea for Windows. Gates used the money Microsoft was making off its PCs to further develop Windows. And that allowed Microsoft to become a trillion-dollar company. 

World-changing people with ample resources create world-changing businesses. 

So… if you want to invest in world-changing businesses… start with the world-changing people gathering the resources necessary to bring their visions to life. 

That is exactly the situation we have with Elon Musk and xAI today.

Invest in a World-Changer Like Elon Musk

We certainly believe that Elon Musk is a world-changer. 

He co-founded PayPal (PYPL), the world’s largest digital payment platform, now worth nearly $70 billion… 

And SpaceX, the world’s largest private space rocket firm, now worth about $180 billion. 

He pioneered one of the world’s largest automakers in Tesla (TSLA)… 

And he’s also the man behind Neuralink, The Boring Company, and X.

Musk has influenced how we pay for things, what cars we drive, how we communicate online, how we see space… 

I’d venture to say that he is one of the most influential business figures of the past 20 years. 

A great example of world-changing.  

And now this world-changing person has not only turned his focus to a new business venture at the heart of possibly the most transformative technology the world has ever seen.

Would you bet against him here?

I don’t think I would.

The Final Word on xAI Stock

As we mentioned earlier, xAI has already launched its own impressive AI chatbot. And it did that with very little outside funding. Just imagine what Musk and company will be able to cook up with $6 billion in outside funding. 

When all is said and done, xAI could be Elon Musk’s biggest venture yet – his signature mark on the world, if you will. 

And right now, you have an opportunity to invest in xAI before this company takes off. 

Now, it’s not a direct investment, per se. After all, xAI is barely a year old. It’s still a private startup, which means you can’t buy its stock anywhere. 

But we have found a potentially huge “backdoor” investment into xAI. It’s a stock that you likely have never heard of before – but we think it could be the leading tech component supplier for this burgeoning AI titan. 

If xAI does win the multi-trillion-dollar AI race… and Elon Musk does it again… then this stock could absolutely soar. 

Get all the details about this potential future winner right now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post 🤖 xAI vs. Everyone: Can Elon Pull Off One Last Big Score? appeared first on InvestorPlace.

Election Day is done, without the chaos many were predicting. We now have a fairly clear picture of the composition of the U.S. government over the next two years.

Donald Trump is on his way back to the White House. And while the House is still undecided, we know that Republicans have taken the Senate.

This will allow President Trump to largely execute his economic plan over the next two years without much pushback.

Of course, that has major implications for the U.S. economy and the stock market.

So, you are probably wondering what industries will thrive over the coming years.

On Wednesday, stocks celebrated the news, with the market rallying more than 2% across the board, paced by huge gains in tech and AI stocks, financial stocks, and small-cap stocks.

That celebration continued – if a bit less heartily – on Thursday, especially after the Federal Reserve confirmed their expected rate cut.

But looking ahead, you are probably wondering what industries will prosper during a Trump presidency.

So, in today’s Smart Money, let’s take a look at an industry that I consider to be a “Buy.” Maybe not for the next few weeks, or for the next few months… but for the next few years.

Then, I’ll share how you can position yourself well for the years ahead.

Let’s dive in…

The Transformation of Natural Gas

I believe that natural gas is a “Buy.”

Now, it must be first stated that not all natural gas is created equal. Its location greatly affects its value.

Today, for example, natural gas fetches $2.75 per million British thermal units (MMBtu) at the Henry Hub in Louisiana, whereas gas at the Waha Hub near the Delaware region of the Permian Basin “sells” for minus $2.46/MMBTU.

In other words, producers near the Waha Hub literally pay companies to truck away natural gas. The Delaware Basin’s natural gas, much like a long-distance sweetheart, is geographically undesirable.

Because of these vast pricing disparities, one company may receive an average of only 40 cents per thousand cubic feet (Mcf) for the gas it pulls out of the ground, while another rakes in more than five times that amount for its gas, on average.

Location matters.

But the pricing structures in place today are not etched in stone. They can shift over time in response to localized shifts in the supply-demand balance.

Today, natural gas prices in the Delaware Basin are depressed for one obvious reason: Gas has nowhere to go. The pipelines that run from the upper Permian Basin to hubs near the Gulf of Mexico do not have enough “offtake capacity” to transport all the gas the region produces.

In the parlance of the oil & gas industry, this excess production is called “stranded gas,” and it is so worthless that producers must find ways to dispose of it. The producers who have permits to burn off the gas simply “flare” it at drilling sites. Otherwise, they must pay companies to truck it away, like dumpsters full of old mattresses.

But the economics of producing natural gas in the Delaware Basin may be on the verge of a major transformation – one that will flip today’s negative gas pricing into solidly positive pricing.

How to Position Yourself for the Years Ahead

As a leading oil & gas production company, my latest recommendation for the paid-up members of Fry’s Investment Report is ideally positioned to benefit from that prospective transformation. You can read more about this company in the November issue of Fry’s Investment Report (subscribers only), which I released just yesterday. (Click here to learn how to join us at the Investment Report.)

This company might also benefit from a new “wildcard” source of natural gas demand: data centers.

As the big tech companies build ever-larger and ever-more-numerous data centers, they are struggling to secure the dedicated power supplies these centers require.

Over the near term, natural gas will take the lead in supplying the additional power. According to Goldman Sachs, natural gas will satisfy 60% of the power demand growth from AI and data centers, while renewables will provide the remaining 40%.

As a result of this growth, data centers could boost the demand for natural gas to fuel U.S. power plants by 20% to 45% over the next five years, according to Wells Fargo research. The midpoint of that estimate would be equivalent to doubling the current production from the Delaware Basin.

The natural gas market offers three major advantages over competing technologies…

The bottom line is that opportunities remain in the oil & gas industry. And beyond my recent oil & gas recommendation, my other Fry’s Investment Report holdings are well positioned for where we’re headed during a Donald Trump presidency.

So, to learn how to join my at Fry’s Investment Report – and to get access to my latest research and recommendations –click here.

Regards,

�������°�

The post This Industry Is a “Buy” for the Next Few Years – Here’s Why appeared first on InvestorPlace.

It’s growing amid rolling hills, in what used to be farmland – blending as well as it can into an environment still populated mostly by horse farms and wineries.

Business is booming in this new center, but you might never guess it while driving through the area.

The buildings look like ordinary warehouses.

But with extremely tight security.

Because the future of the Artificial Intelligence boom lies inside.

Welcome to “Data Center Alley” in Loudon County, Va. – only about a two-hour drive from our InvestorPlace offices. This area houses 133 of the 471 data centers located in Virginia, which boasts the highest number of data centers in the U.S.

Local energy provider Dominion Power reported that data centers now account for 24% of the company’s total electricity sales in the state.

Why are data centers so important?

For many reasons you probably can imagine but don’t often think about.

Data centers provide the computational power, storage space, and networking that AI needs to train and run models effectively. 

They are also the backbone behind social media, navigation apps and the ride sharing apps on your phone.

Northern Virginia is considered by some to be the data center capital of the world. It is considered the largest data center market not only in the United States, but globally.

And with Donald Trump’s victory, the market is going to get even busier.

What a Trump Administration Means for AI

Big tech executives rushed to congratulate Trump in the wake of Tuesday’s resounding victory over Vice President Kamala Harris.

Apple CEO Tim Cook posted on X:

Meta CEO Mark Zuckerberg posted on Instagram,

Trump’s relationship with big tech hasn’t always been friendly.

In his book “Save America,” Trump accused Zuckerberg of plotting against him and threatened him with “life in prison” if it happened again.

However, Trump has made clear his determination that the U.S. lead the world in the global AI race.

In his first administration, Trump sought to hinder China’s AI development by limiting access to the chips needed for AI development – a stance likely to continue if a trade war breaks out between the countries again.

Trump has also promised to repeal a Biden Administration Executive Order that tried to place guardrails around AI technologies.

Trump stated that on “day one” he would cancel the order and “ban the use of AI to censor the speech of American citizens.”

The Center for AI Policy, a nonpartisan research organization dedicated to mitigating the catastrophic risks of AI through policy development and advocacy, released a statement Thursday saying it expects a Trump administration to favor more industry self-regulation through voluntary commitments rather than the Biden Administration’s government-led efforts.

Given that AI has been the macro investing trend driving this bull market, it’s easy to conclude that things are only going to accelerate.

That’s what investing legend �������°� predicted back in May, when he predicted Trump would win the race. Here is a sample of what he said back then.

While the stock market is roaring right now… 

It’s just a preview of what’s to come when Trump is re-elected. 

Because Donald Trump is all about business. 

And when he returns to the Oval Office, his first act could be rocket-fuel for an already hot market. 

Trump’s first term started the AI boom

Louis points to some specific actions you may have forgotten.

Trump’s many accomplishments have been buried behind a bunch of trivial complaints, drummed up by his liberal rivals. 

But look closer, and Trump’s fingerprints are all over the current boom in technology. 

 In fact, the rise of AI can be traced back to an Executive Order issued by Trump in 2019. 

It’s not a stretch to say that without Executive Order 13859

We don’t have a bull market in AI stocks.  

EO 13859, called Maintaining American Leadership in Artificial Intelligence, helped double AI research investment and created the first regulatory structure for AI – a move that predates the emergence of ChatGPT…

Louis continued:

Private AI investment jumped – and so did the progress of the technology. 

Trump also agreed to make more government data available for machine learning and AI. 

This is the same data used to help train Large Language Models like ChatGPT.

This Executive Order is what created the environment for ChatGPT’s owner, OpenAI, to get funding from Microsoft – starting with $1 billion in 2019.

The AI chatbot took the world by storm and thrust AI into the spotlight. 

Louis has had the AI story right for some time. In his Growth Investor service, he recommended Nvidia (NVDA) in 2019, which has since soared 30X.

Now, Louis believes that a Trump Administration will usher in a second boom for AI stocks.

The big returns seen from Nvidia and other chip makers could pale in comparison to what’s coming.

Louis sees six specific AI stocks that will benefit from this coming boom, and a huge part of the story starts in the small suburb in Northern Virginia.

Because for AI to flourish, we’ll need more data centers and more power.

Trump is determined that the U.S. lead the way in AI technology, and investors aligned with this trend could see substantial returns.

But you still have to choose your investments carefully.

Louis can help in his Growth Investor service.

Enjoy your weekend.

Luis Hernandez

Editor in Chief, InvestorPlace

The post Data Centers and the AI Revolution… and How Trump Could Ignite a Second AI Boom appeared first on InvestorPlace.

Musk spent about $130 million on the Trump campaign and related conservative efforts. And ever since it became clear that Trump won a second term in the White House, Tesla (TSLA) stock has surged higher. And Musk’s net worth has grown by over $30 billion. 

How’s that for a return on investment? Musk committed $130 million to make more than $30 billion in just a few days. 

And his economic gains may just be getting started. 

Though, that wealth isn’t coming from Tesla stock alone. Rather, Musk stands to make even more money on his “Trump bet” through another one of his ventures – xAI. 

Musk’s AI startup is working to create foundational AI models, similar to OpenAI’s ChatGPT. Currently, while an impressive venture that may soon command a $40 billion valuation, xAI is a laggard in the ongoing AI Race, with companies like Anthropic and OpenAI leading the pack. 

But now that Trump is set to be the next president of the United States, that will likely soon change. 

Indeed, xAI could very well become the leader in the AI Race. And that’s good news for Elon Musk – and even better news for investors piling in today.

Three Reasons Why xAI Could Soon Lead the Pack

We see three big reasons why xAI could soon dominate the AI industry.

1: Donald Trump and Elon Musk’s Friendship 

As a late-comer to the AI Race, xAI has not yet established firm connections with the U.S. government. Instead, thus far, the government has chosen to work with companies like OpenAI and Anthropic to integrate generative AI technologies into various departments. 

But now that Musk has helped Trump to win back the White House, it seems likely that the U.S. government will start working with xAI on its next-gen AI initiatives. So, not only should the startup receive an invitation to this party, if you will; it will likely be the guest of honor.

2: J.D. Vance’s Distaste for Current Leading AI Models 

Given his venture capital roots and ties to Silicon Valley, we increasingly see J.D. Vance as the “tech guy” in this leadership duo. And as it turns out, he doesn’t seem to like the AI industry’s current leading models. 

Earlier this year, Vance posted on X, claiming that one of the biggest issues with AI is “a partisan group of crazy people who use AI to infect every part of the information economy with left-wing bias.” He went on to say that, “Gemini can’t produce accurate history. ChatGPT promotes genocidal concepts.”

As of this moment, Gemini and ChatGPT are considered two of the leading foundational AI models in the market – and are direct competitors to xAI. 

Given Vance’s seeming distaste for those models, it seems likely that the Trump administration will do what it can to support accelerated xAI development and deployment. 

3: The Anticipated Removal of a Biden-Era AI Executive Order

Back in October 2023, U.S. President Joe Biden passed an executive order requiring developers of foundational AI models to share safety test results and other critical information with the U.S. government. The order subjects companies like OpenAI and xAI to red-teaming exercises by The National Institute of Standards and Technology (NIST). 

It is widely presumed that Trump will repeal this executive order, removing a lot of the red tape around developing foundational AI models. With those barriers eliminated, companies like xAI should be able to build and deploy new AI models faster than ever before – providing a boost, of course, to xAI. 

The Final Word

For these three big reasons, we think xAI is on the “launch pad” for enormous growth and expansion over the next few years, fueled by the Trump-Musk alliance. 

Meanwhile, the stock market is poised for a seismic shift, with xAI at the epicenter of a technological revolution that could redefine investment landscapes by 2025.

In fact, we think that xAI could become the crown jewel in Musk’s empire, potentially outpacing even his most successful ventures.

This growth trajectory could send shockwaves through the AI market…

And we’ve found a compelling “backdoor” way to play it. 

This under-the-radar opportunity offers exposure to xAI’s potential without the hurdles involved with venture capital and high-profile tech stocks.

Learn more about this little-known opportunity to position your portfolio for the AI-driven market of 2025.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post AI’s Dark Horse Could Become Its Crown Jewel Under Trump appeared first on InvestorPlace.

So, if a few of you forgot that we are also smack dab in the middle of earnings season, it’s understandable.

But there’s one particular company that Wall Street has been waiting to hear from this earnings season: Super Micro Computer, Inc. (SMCI). And we finally got an update from the company this past Tuesday.

Now, you may recall that Super Microtook a serious beating earlier this summer after it was riding high as one of the hottest AI companies during the AI boom.

But then on August 26, Super Micro fell victim to a short-seller report by Hindenburg Research. A former employee claimed that Super Micro was committing accounting violations and filed a whistleblower report.

Personally, I think short sellers are scum. They issue reports like this about companies for one simple reason: to cause a stock to tumble. They make money when the stock goes down. They take the money and run, and never have any follow-up reports.

The Department of Justice (DOJ), however, took Hindenburg Research’s allegations seriously and issued a probe to investigate the allegations in light of the report. Super Micro had to delay the filing of its annual 10-K report to the Securities & Exchange Commission (SEC).

Then on October 30, SMCI dropped more than 30% after its auditor, Ernst & Young, resigned, citing concerns over the company’s controls. The stock fell another 12% the following day after CNBC’s Jim Cramer said that Super Micro might get delisted from the NASDAQ. The company did get a deficiency letter, and it has until November 16 to comply.

Leading up to Super Micro’s first-quarter preliminary results, people attacking the company were still claiming that it is exaggerating its sales. But what I think happened is that Super Micro’s sales are booked far in advance.

In other words, salespeople might be booking sales today that won’t materialize for two, three, or even four years. And that’s because there is a significant chip shortage due to the insane demand caused by the AI Boom. It’s also possible the cloud computing centers that are being retrofitted and built across the country could be delayed until there’s enough electricity to run them.

So, in today’s Market 360, let’s take a closer look at Super Micro’s first-quarter preliminary results to see if there was any merit to the short seller’s claims. I’ll also discuss if the stock is still a buy after earnings. Then, I’ll share a way that you can profit from the next wave of the AI boom.

Let’s Look at the Numbers…

On Tuesday night, Super Micro provided preliminary results for the first quarter in fiscal year 2025. The company expects total sales between $5.9 billion and $6.0 billion, compared to its previous outlook for $6.0 billion to $7.0 billion. First-quarter earnings per share are now forecast to be between $0.75 and $0.76, compared to previous guidance for $0.67 to $0.83.

The current consensus estimate calls for sales of $6.45 billion and earnings of $0.75 per share. It’s also important to note that Super Micro Computer’s preliminary outlook still represents 186.4% to 191.3% year-over-year sales growth and 120.6% to 123.5% year-over-year earnings growth.

Regarding the 10-K filing, Super Micro Computer continues to work on it and can’t predict when it will be filed. As a result, the company is also taking the necessary steps to achieve compliance with the NASDAQ for its listing.

Super Micro Computer also noted that the independent Special Committee completed its investigation into the accounting concerns. The three-month investigation found no evidence of fraud or misconduct from management or the board of directors. A full report will be released in the upcoming weeks.

The issue with Super Micro is that when orders are booked, they may not be fulfilled for four or five years. I used to do corporate accounting, and I booked the sales immediately and put it in a backlog. So, as long as the orders go into an order backlog, they should be fine.

For fiscal year 2025, Super Micro expects total sales between $5.5 billion and $6.1 billion and earnings per share between $0.56 and $0.65. That compares to sales of $3.66 billion and earnings of $0.56 per share in the second quarter of fiscal year 2024.

This guidance was below analysts’ expectations, and Wall Street reacted in its typical knee-jerk manner in the aftermath of this report. The stock fell 18% – its lowest level since May of last year – although I should mention that as of this writing, it has since recovered about half that loss since then.

Still, the stock is down roughly 50% since October 30. So, many investors are wondering whether it might be time to let it go.

Stock Grader Says…

Looking at Stock Grader (subscription required), Super Micro has been downgraded to a D-rating, which does mean it’s a “Sell.” However, this is a rare case where I think it’s worth holding. The reality is it could easily be upgraded to a C- or B-rating if it bounces, and it is bouncing. On Wednesday, SMCI shares surged more than 12%.

Remember, Super Micro still has superior fundamentals. In fact, I don’t have stocks with stronger earnings and sales growth than Super Micro in my system. So, if the company can clear things up and address some of these accusations head-on, I expect its grade to improve significantly.

In other words, if you can stomach it, I would consider holding on to it.

Profit from the Next Wave of AI

Now, if you’re looking for other ways to profit off the AI boom, let me tell you about the second wave of the AI boom. And it is all thanks to Trump’s win in the election.

I expect Trump to issue an executive order on energy. He’ll roll back all of the environmental regulations President Joe Biden slapped on the industry to open more land and sea for oil and natural gas drilling, as well as build more natural gas infrastructure.

Once Trump opens the floodgates, I expect demand for these data centers to explode… and folks who invest in the right companies early will rake in the profits.

There are three data center stocks in particular that could give the necessary power that AI needs and benefit from the incoming boom. I lay out all the details in my Growth Investor special report: The Trump AI Boom: 3 Data Center Stocks With Extreme Upside Potential.

If you want the names of these three stocks, click here and become a Growth Investor member today.

Sincerely,

�������°�

Editor, Market360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Super Micro Computer, Inc. (SMCI)

The post Super Micro Falls 50% – Should You Buy the Dip or Sell? appeared first on InvestorPlace.

Suddenly, the upside potential for stocks over the next 12 months has jumped.

To explain why, let’s start with the two factors that drive a stock’s price: earnings, and how much investors are willing to pay for those earnings (which is a proxy for investor sentiment). These are the variables behind investing’s most common valuation metric, the price-to-earnings ratio (PE).

Over the last year, regular Digest readers have seen me highlight all sorts of valuation indicators that suggest investor sentiment has been the primary driver of stock market gains in recent quarters, not earnings.

I’ve argued that if we want this bull market to be with us for a long time, then at some point, today’s elevated valuations need the support of higher earnings. That would take pressure off nosebleed valuations that have been run up by sentiment.

Without greater earnings, stock prices are at risk of falling if investors begin to believe that they’re paying too much for too few earnings, causing them to sell stocks.

So, why do stocks suddenly have far greater upside potential?

Trump.

Specifically, his plans to cut corporate taxes and deregulate.

It isn’t a lock, but with Trump in the White House, Republican control in the Senate, and the likelihood of Republican control of the House, Trump should be able to push through his proposal to lower corporate taxes from 21% to 15%.

So, without even selling one extra widget, corporate profits would climb.

Here’s The Wall Street Journal with some context and forecasts:

In 2018, after Trump’s first round of tax reductions came into effect, the S&P 500’s earnings-per-share, or EPS, jumped by 21%, compared with an 11% increase the previous year…

Some Wall Street analysts think a new wave of tax cuts could boost EPS somewhere between 5% and 10%.

Meanwhile, deregulation could be an even bigger tailwind for earnings and growth.

Many CEOs will tell you that between high taxes and burdensome regulation, the greater evil is burdensome regulation.

For example, here’s Insights from the Stanford Business School back in 2017:

Jamie Dimon, the longtime chairman and CEO of JP Morgan Chase… told an audience that inappropriate regulation and burdensome taxation has cut U.S. GDP growth in half…

Companies prefer to do business overseas because “it’s so much more advantageous to do stuff over there.”

Millions of small businesses were never formed, Dimon says, because government policies stood in the way.

Tesla CEO Elon Musk has said “excessive regulation is like taking a bunch of rocks and putting them in your backpack.”

As to the fallout from excessive regulation, we can look to Europe. A few months ago, Ericsson CEO Börje Ekholm said that regulation “is driving Europe to last place [and] is driving Europe to irrelevance.”

With this as our background, here’s the AP News:

The president-elect seeks to reduce the role of federal bureaucrats and regulations across economic sectors. Trump frames all regulatory cuts as an economic magic wand.

He pledges precipitous drops in U.S. households’ utility bills by removing obstacles to fossil fuel production… [He also] promises to unleash housing construction by cutting regulations…and also says he would end “frivolous litigation from the environmental extremists.”

And here’s Thomson Reuters:

The regulatory landscape under Trump is also expected to see significant shifts. Deregulation would be a key theme, affecting sectors from energy to finance.

Bottom line: Fewer regulations are inherently profit-accretive for corporate America either by reducing compliance expense or by enabling greater revenue streams due to a freer market.

In both cases, it’s likely to result in higher earnings per share, which raises the ceiling for market returns.

In the wake of Trump’s win, investors are catapulting into “risk on” mode. This means selling bonds and cannonballing into stocks.

Yesterday, on an internal Slack channel, Lucas Downey, a quant specialist who works closely with Jason Bodner at our corporate partner TradeSmith, offered some perspective on the post-Trump-win rally:

Yesterday’s mega rally saw some of the largest inflows ever in our data.

486 equities were accumulated, that’s the 5th highest buy day ever going back to 2009. Below shows recent prior thrust days:

Now, think about all the asset managers who had nervous clients hiding out in bonds. Think about all the nervous investors who had their own money in cash.

With Trump’s win and the likelihood of lower corporate taxes, reduced regulation, heavy government spending, and a potential resurgence of inflation, are those asset managers going to want to keep their clients in bonds? Not if they want to keep their jobs.

Are those nervous investors going to want to stay in cash? Not if they want to keep up with the Jones’.

I can’t recall where I heard it, but there’s an old market saying that goes something like, “the only thing that investors hate more than underperforming the market is underperforming their neighbor.”

Though the market needs a pullback to digest this week’s monster rally, don’t bet against a roaring, FOMO-based stampede into stocks as we push toward Christmas.

As we’ve stressed repeatedly here in the Digest, an emphasis on defense is far more important for growing your wealth than a focus on offense. But don’t take it from me. Here’s what a few pros have said over the years:

• Charles Ellis: “If you avoid large losses with a strong defense, the winnings will have every opportunity to take care of themselves.”
• Benjamin Graham: “The essence of investment management is the management of risks, not the management of returns.”
• Paul Tudor Jones: “Don’t focus on making money; focus on protecting what you have.”

So, what’s the risk to a Trump-fueled melt-up?

Interest rates/Treasury yields.

On Wednesday, our tech expert Luke Lango provided a 10-point guideline for what’s likely to play out for the markets under Trump’s second term.

Though Luke is bullish, he points toward the 10-year Treasury yield as the biggest wild card that could limit market gains.

From Luke:

The path forward for interest rates and Treasury yields seems uncertain, as it will hinge largely upon inflation levels over the next few quarters.

If Trump’s pro-economic and protectionist policies do create more inflation, which seems likely, then interest rates will not decline as much as the market expects… We will likely only get two or three cuts, and Treasury yields will rise…

If inflation rises and interest rates stay high, valuation multiples on the S&P 500 will compress, limiting upside in stocks.

This idea of “compressing valuation multiples” is the technical term for what I described earlier when I wrote, “Stock prices are at risk of falling if investors begin to believe that they’re paying too much for too few earnings, causing them to sell stocks.”

Luke sees the key issue being the 10-year Treasury yield:

If Treasury yields stay at or below 4.5%, stock multiples can expand and drive additional upside in stocks (beyond earnings growth).

But if yields climb toward and potentially even above 5%, multiple compression will limit gains. 

This economic dynamic is arguably the most important of Trump’s presidency. And as of now, it’s unclear how it will play out.

As I write Friday, the 10-year Treasury yield is easing back. After having climbed as high as 4.47% earlier in the week, it’s down to 4.27% as I write mid-morning.

This is what we want to see.

As to what that “boom” might look like, Luke believes 30% gains over the next two years are on the table, possibly 40%.

But for this to happen, there’s a clear progression:

Trump’s spending, tax cuts, and deregulation must not reignite inflation… the Fed must proceed with four-plus interest rate cuts over the coming months… and the 10-year Treasury yield must stay under 4.50% (and the lower, the better).

But if all this comes to pass, stocks are likely to make investors a boatload of money over the coming quarters.

Yes, be wise about what’s in your portfolio. Yes, protect your wealth with stop-losses and appropriate position-sizes. And yes, take the time to create an overall investment plan.

But with those steps in place, stay with this momentum. After all, there are new, genuine reasons to believe this bull market just got a fresh wind.

Have a good evening,

Jeff Remsburg

The post The Market’s Upside Potential Just Jumped appeared first on InvestorPlace.

A red wave swept across the U.S. this week, with Donald Trump winning the presidential election.

I’m on the record stating that whoever won Pennsylvania would win the election – and that’s exactly what happened. Donald Trump actually won all three of the big “Blue Wall” swing states, Pennsylvania, Wisconsin and Michigan. The swing states of Arizona, Georgia, Nevada and North Carolina were also all red this time around.

Clearly, these folks were ready for a change.

The red wave that swept across the U.S. also poured into Congress. The Republicans secured the majority in the Senate, and they are closing in on a majority in the House.

In the meantime, Trump 2.0 was celebrated by the stock market this week.

All of the major indices soared higher on Wednesday following the election results. The S&P 500 jumped 2.5%, the Dow rallied 3.5% and the NASDAQ rose nearly 3%. Smaller-cap stocks led the surge on Wednesday, with the Russell 2000 up 5.8%.

Interestingly, stocks didn’t take much of a breather on Thursday. The celebration continued ahead of and in the wake of the Federal Reserve’s decision to cut key interest rates by 0.25% (you can get my thoughts on the Fed’s rate cut here).

So, now that the election is over, we can draw a reasonable conclusion that President Trump will have a mandate to largely execute his economic plan over the next two years without much pushback.

Of course, that has major implications for AI technology and the stock market.

So, in today’s Market 360, I want to share some thoughts on the election and how a Trump 2.0 administration may impact the market now that the dust has settled. I’ll also tell you how to prepare to profit from a second wave of the AI Boom now that Trump will be president.

Get Ready for an Economic Boom

There is no doubt, in my opinion, that manufacturing played a key role in the 2024 presidential election. The fact is that the U.S. manufacturing sector has been in a recession for more than two years.

The Institute of Supply Management (ISM) recently announced that its manufacturing index declined to 46.5 in October, down from 47.2 in September. Any reading below 50 signals contraction. Also notable, 11 of the 16 industries surveyed reported contraction in October.

Clearly, the folks in the big manufacturing states of Michigan, Pennsylvania and Wisconsin are ready for a change.

And Trump 2.0 is anticipated to ignite that change with a manufacturing turnaround.

The Trump administration is expected to help the manufacturing sector expand via tariffs against unfair competition overseas, lower interest rates (with the Federal Reserve’s help) and cheaper energy prices that give the U.S. a natural advantage compared to Europe, Japan and other competitors.

If these can be accomplished, then, in theory, the U.S. should experience a manufacturing boom.

Let me break down each of these categories to explain further…

Tariffs: The concerns over higher U.S. tariffs are unwarranted. The new Trump administration plans to level the playing field and treat our trading partners as they treat us. As an example, if the European Union (EU) slaps a 10% tariff on exported U.S. vehicles and the U.S. only imposes a 2.5% tariff, then the EU has the choice to lower tariffs on U.S. exports or the U.S. can raise tariffs to 10% on European imports.

Interest Rates: Treasury yields jumped in the wake of the Trump victory, with the 10-year Treasury yield rising as high as 4.478% on Wednesday. Yields are rising in anticipation of higher budget deficits and more robust economic growth. Remember, the Fed never fights market rates. So, I now expect that the Fed will “pause” after its 0.25% rate cut on Thursday, keeping the fed funds rate between 4.5% and 4.75% in the near term.

Energy: Trump 2.0 is anticipated to spur a domestic energy boom. This will help onshore manufacturing, as well as fuel the AI cloud computing boom. Remember, the utility grid needs to double over the next decade in order to meet demand for AI and cloud computing. Since the Trump administration is more fossil fuel-friendly, natural gas will likely be utilized to boost electricity output. That will ignite a boom in the natural gas industry, as well as help expand the U.S. utility grid.

So, this Trump presidency means a second boom is coming for AI stocks… and I want you to be prepared. That’s why I’ve identified six specific AI stocks that will benefit from this coming boom.

Click here to learn more now.

Sincerely,

�������°�

Editor, Market360

The post What Trump 2.0 Means for the AI Boom appeared first on InvestorPlace.

That is, ever since Donald Trump won the 47^th U.S. Presidential Election – on the premise that his pro-growth policies will benefit the U.S. economy and stock market – stocks have been taking off. 

But how big is the “Trump Bump” really? Is it enough to push stocks 2%… 5%… 10% higher? 

Well, we’ve looked back on the market’s performance during Trump’s first term in office. And in our analysis, we observed two forms of the Trump Bump. 

Clearly, those two factors are net-positive for stocks. And we see a pathway for this election-driven rally to push stocks almost 30% higher in 2025. 

Here’s our math.

Higher Earnings Mean Stocks Should Keep Rising

The first form of the “Trump Bump” – higher earnings – is about a 2% to 4% boost in earnings, before considering tax cuts. That is, from November 2016 (when Trump won his first term as president) to December 2017 (the end of his first year in office), we saw 2017 and ‘18 earnings estimates rise about 2% and 4%, respectively. 

So, it seems Trump’s pro-growth policies were good enough for a considerable rise in earnings estimates during his last term in office. We think that’s achievable this time around, too. 

Meanwhile, there is talk that Trump will also reduce the corporate tax rate from 21% to 15%. Goldman Sachs estimates that if he is successful at doing so, it could result in a 4% boost to earnings per share (EPS) for the S&P 500. 

In other words, the boost to earnings over the next few years will likely be a 2% to 4% bump-up from pro-growth policies and a 4% bump-up from corporate tax cuts. Altogether, that’s a 6% to 8% increase in earnings estimates. 

At the midpoint, that would take the current 2026 EPS estimate for the S&P 500 of ~$303 and make it $325 by the end of next year. 

A Second Term for Trump Will Likely Boost Valuations

Now, the second bump factor – increased valuations – would be about a 10% rise in valuation multiples. 

Throughout 2016 – before Trump took office for his first term – the S&P 500 was consistently trading between 16X and 18X forward earnings. That expanded during Trump’s first year in office, when the S&P consistently traded between 18X and 19X forward earnings. 

In other words, likely due to increased confidence about the economy, investors pushed up valuations by ~10% the last time Trump was elected. 

We think that’s doable this time around, too. Throughout 2024, the S&P 500 has mostly bounced between trading at 20.5X and 22.5X forward earnings. And a 10% boost to that implies a ~23.5X forward earnings multiple for stocks. 

If we combine those two “Trump Bump” factors – a ~7% boost to earnings and a ~10% rise in valuations – then we’re looking at 2026 estimated EPS for the S&P 500 of $325 and a 23.5X forward earnings multiple. That combination implies a 2025 target for the S&P of 7,640 – nearly 30% above where it is currently trading. 

In other words, if Trump’s second term as president plays out like his first (in terms of stock market earnings and valuation impact), stocks could soar ~30% over the next 12 months. 

The Final Word

Of course, if earnings and valuations do rise in such a fashion, the market will have likely run into “bubble territory.” 

That’s what we think is most likely to happen – a classic “Boom-Bust” cycle. 

We expect that stocks will boom in 2025 and likely into 2026 on the back of economic euphoria. Then, something goes awry – maybe reinflation or too much lending; maybe the labor market cracks, or there’s too much AI investment and not enough payback – and the boom turns into a bust. 

That is what happened in Trump’s first term. Stocks boomed 30% higher from January 2017 to September 2018, before nosediving about 20% from September 2018 to December 2018. 

Boom. Bust. 

Something similar is likely to happen this time around – especially if the boom in 2025/26 is particularly strong, as we think it could be, given that the Fed is simultaneously cutting rates and that the AI Boom remains vigorous. 

As such, we think the investment game plan for Trump 2.0 over the next 12 to 24 months is simple: Get fully bullish right now and stay that way for as long as the market keeps trending higher. 

But be prepared to cash out and play defense as soon some things start to break (likely in mid-to-late 2026). 

And with that in mind, we invite you to check out a few of the top stocks we’re watching right now to potentially hit huge returns in this exciting rally.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Behind the “Trump Bump”: How Much Could Stocks Rise in 2025? appeared first on InvestorPlace.

This afternoon, the Federal Reserve cut interest rates by 25 basis points, bringing the Fed Funds target rate down to 4.50% – 4.75%.

While this was widely expected, the real story was Federal Reserve Chairman Jerome Powell and his press conference…

It was about as dovish as anything that bulls could want.

Powell sounded confident about the condition of both the labor market and inflation… he downplayed the recent run-up in Treasury yields… and he openly praised the strength of the economy.

I watched the market’s reaction to his live press conference in real time, noting a steady upward progression in the three major indexes as he spoke.

Here’s a brief synopsis of some of the major talking points:

• The Fed is not on a pre-set course and is making decisions meeting-by-meeting. They’re flexible and will respond to the incoming data as appropriate.
• Powell isn’t concerned by the recent spike in the 10-year Treasury yield. First, he attributes the spike not to fears of re-inflation, but more so expectations of stronger economic growth. Second, the real question surrounding the spike is “will it be sustained?” Right now, this is just a spike, not a new plateau, and so Powell is unconcerned.
• The labor market is in good balance. Meanwhile, inflation is on a path down to 2%, but the job isn’t quite done, hence today’s rate cut.
• Looking ahead, the challenge will be finding the neutral rate. The Fed might slow down its pace of cuts as they approach what they believe to be the neutral rate. Powell noted, “The right way to find neutral is patiently and carefully.”
• Recent spikes in parts of our inflation reports aren’t real-time inflation; rather, they’re “catch-up” inflation. For example, old apartment rents that are now rolling over with new tenants are doing so at higher, market rental rates. While this does represent inflation, it’s a catch-up, not “new.”
• Looking toward 2025, Powell said that the economy may be even stronger than our current economy. And for Americans who don’t feel good about today’s economy, the key is sustained wage gains. While Powell believes we’re on a path toward that goal, it’ll likely take some time to be felt.

Nothing Powell said threatened the yesterday’s market melt-up or suggested investors need to fear a hawkish Fed in the FOMC meetings to come.

Bottom line: Powell greenlit more gains.

The markets saw enormous capital flows yesterday, as Wall Street positioned itself for “MAGA 2.0.” However, Trump’s ability to implement all his policy proposals isn’t a lock.

Legendary investor �������°� shared his take in yesterday’s Growth Investor Flash Alert explaining:

[Donald Trump’s] momentum is swinging some Senate races. And so, the Republican majority in the Senate is now going to be bigger than expected.

The House of Representatives is a closer call. We’re not going to know who leads the House for weeks because some of these races might be litigated.

You have to realize that even though there’s this Trump train of momentum underway, Republicans are still far from a majority in the House, and the House controls spending. So, the Democrats are definitely going to want to hang onto power by having a majority in the House.

So, don’t get too excited about a sweep. We’re not done yet.

Nevertheless, Louis sees a Trump boom on the way, and urges investors to prepare for growth:

Be prepared to hit the accelerator button because Trump is going to want to grow this economy, and there are going to be a lot of pro-growth initiatives being passed.

I’m very bullish on the future, and for 2025.

You can get more of Louis’ thoughts about investing under Trump right here.

In recent weeks, the potential for a fresh wave of tariffs under Trump 2.0 has raised concerns among some investors. Critics argue additional tariffs will hurt the U.S. consumer by raising prices on imports.

While that could be the case, let’s remember that the U.S. consumer has been living in a world that reflects Trump’s tariffs for years at this point. Though it doesn’t get much press, the Biden administration maintained all of Trump’s tariffs on China. Furthermore, in September, Biden added new tariffs.

From Utility Dive:

The Office of the U.S. Trade Representative finalized its plan Friday to raise tariffs on a slew of goods made in China, largely adopting hikes it first proposed in May.

The heightened tariffs go after strategic product categories, including electric vehicles, batteries, critical minerals, semiconductors and solar cells. The final tariff structure includes 14 product categories that cover thousands of items…

The Biden administration’s dramatic hikes for this year include a 100% tariff on electric vehicles, a 25% tariff on lithium-ion EV batteries and a 50% tariff on photovoltaic solar cells. A 50% tariff on semiconductors made in China will go into effect in 2025.

As to the potential for additional Chinese tariffs under Trump and/or new tariffs on European goods, Louis urges investors to maintain perspective:

Let’s not overreact to all the bad press about tariffs. Tariffs will come in if trade isn’t free and fair.

If Europe charges higher tariffs than we do, our tariffs are going up and theirs are going down. It’s as simple as that.

It’s argued that a lot of China’s trade is unfair. So, they’ll have the biggest tariffs.

It was a comprehensive, 10-point guideline for what to expect.

Below are excerpts that cover each idea’s main point. It’s on the longer side, so to make it easier for you to read, we won’t italicize the content as we usually do when quoting. But this is all from Luke, writing yesterday afternoon.

1: Stocks Will Go Higher

With Republican control of the Senate (and possibly the House), Trump should be able to extend and make permanent the 2017 Tax Cuts and Jobs Act. Those tax cuts should stimulate economic confidence and power more consumer spending and economic investment – the sum of which will drive corporate earnings higher in 2025 and ‘26.

2: Oil Should Stay Flat, But Inflation Will Be a ‘Wild Card’ 

We believe that oil prices will likely flatline over the next 12 to 24 months, with growth in U.S. economic activity balanced by headwinds related to increased domestic oil production.

If prices hold around $70, inflation should remain between 2% to 3%. However, stronger U.S. growth in 2025-26 could present upside risks to inflation. We view inflation as a ‘wildcard’ risk.

3: Interest Rates Are Also a ‘Wild Card’ 

The path forward for interest rates and Treasury yields seems uncertain, as it will hinge largely upon inflation levels over the next few quarters which is uncertain.

If Trump’s pro-economic and protectionist policies do create more inflation, which seems likely, then interest rates will not decline as much as the market expects.

4: Big Upside in Stocks Will Hinge on Inflation, Interest Rates, and Valuation

While we think stocks have good upside prospects over the next 12 to 24 months, spectacular upside potential will depend on the path forward for inflation and interest rates.

5: Large-Cap Stocks Will Continue to Outperform

While small caps have outperformed in the day after Trump’s latest victory, history suggests that his tax cuts, tariffs, deregulation, and other economic policies are actually better for large caps.

6: Growth Stocks Will Remain the Winners

Trump’s policies should stimulate economic growth, which means they should be good for growth stocks.

7: ‘New-School’ Growth Stocks Should Be the Biggest Winners

While growth stocks have performed exceedingly well in this AI Bull Market, so-called ‘new school’ growth stocks – those of smaller, disruptive tech startups – have lagged. The best benchmark for these ‘new schoolers’ is Cathie Wood’s ARK Innovation ETF (ARKK).

8: Clean Tech Stocks Will Crash; But Nuclear Stocks Could Surge

While the stock market surged higher today, not all stocks joined the party. Clean tech stocks, for example, broadly crashed, led by double-digit declines across many solar, wind, hydrogen, EV, and energy storage stocks.

9: Financial Stocks Should Be Outperformers

As deregulation and stronger economic growth unlocked enhanced profit growth for financial firms, financial stocks were huge winners during Trump’s first term. We think the next few years should be a repeat of that.

10: Real Estate Stocks Could Struggle

Like that of clean energy, real estate stocks largely failed to join today’s market rally, likely because of the interest rate ‘wildcard’ risk cited above. A Trump presidency could mean higher interest and mortgage rates.

To read Luke’s entire 10-point analysis, click here. It’s a fantastic overview of where the markets are likely headed, along with the key issues to watch that will determine performance.

Before we wrap up, a quick word of congratulations to Luke’s Innovation Investor subscribers. They used the post-election market surge as an opportunity to lock in profits on four positions:

• 40% gains on the VanEck Digital Transformation ETF (DAPP)
• 50% returns on Q2 Holdings (QTWO)
• 60% gains on Intapp (INTA)
• 200% profits on AppLovin (APP).

Better yet, if Luke’s analysis of Trump’s second term plays out, a slew of similar returns are on the way.

Stay tuned to the Digest for updates on these stories.

Have a good evening,

Jeff Remsburg

The post Powell & Co. Greenlight More Gains appeared first on InvestorPlace.

Sure, at the headline level, the Nasdaq only climbed about 1.5%, while the S&P 500 rose just 0.7%. That’s a pretty normal “good day” for Wall Street; nothing to write home about. 

But if we look underneath the hood, we see that the price action at the individual stock level was quite impressive. 

More than 50 different stocks rallied 20%-plus today. �������°� 15 rallied more than 30%. Seven surged more than 40% higher. Five rocketed over 50%, and two stocks completely doubled…

All in one day. 

That is some truly sensational price action. 

And from what we can tell, three big catalysts are driving this bullishness onward. 

The ‘Trump Bump’ Is Leading Stocks Higher This Week

The most prominent catalyst lighting a fire under stocks this week – what folks are calling the ‘Trump Bump.’ Stocks continue to rally on the belief that President-elect Trump’s policies will be good for the markets. 

While many initially thought that Trump’s tariffs would be inflationary, several experts have begun to second-guess that consensus belief. 

Bloomberg’s Anna Wong is among those dissenters. In a research note this week, Wong laid out what she believes is the most plausible path forward. She anticipates that Trump won’t impose sweeping universal tariffs, which would limit their inflationary impact. And she isn’t alone in that thinking.

In other words, many economists are now shifting their perspective, endorsing the idea that Trump’s tariffs will likely cause some reinflation but nothing worrisome. As a result, Treasury yields actually dropped today as markets placed faith in a Goldilocks outcome – pro-growth policies that don’t spur inflation. 

Rate Cuts and Strong Earnings Tee Stocks Up to Rocket

Rate cuts are also fueling the market’s bullish fires. Earlier this afternoon, the U.S. Federal Reserve announced its decision to cut interest rates by 25 basis points. Plus, Fed Board Chair Jerome Powell said that rate cuts are likely to keep coming. 

Specifically, he said that rates are still restrictive and that inflation still looks to be falling toward 2%. Though he emphasized the central bank’s need to keep a close eye on the incoming data and respond accordingly, he heavily implied that rate cuts should continue.

And last but not least – strong corporate earnings. Several stocks absolutely soared today on the back of impressive quarterly earnings reports. 

For example, marketing firm AppLovin (APP) surged more than 40% after management noted how its new AI-powered ad placement tool, AXON, powered much stronger-than-expected revenue growth at the firm. Housing tech company Zillow (Z) popped more than 20% after it reported impressive growth, despite working against such a tough housing market backdrop. 

Ride-hailing titan Lyft (LYFT) soared about 25% after it reported record ridership numbers. And quantum computing firm IonQ (IONQ) ripped 35% higher after it announced multiple new quantum application development partnerships. 

This impressive outperformance is driving stocks far higher. And we don’t think the gains are over just yet.

The Final Word

Between these three catalysts – the Trump Bump, rate cuts, and strong earnings – investors are very optimistic about the outlook for stocks over the next 12 months. 

And we’re confident that this optimism is not misplaced.

Now, it may be overstated in the short term. Things do feel a bit frothy after today’s big rally. But so long as all three catalysts remain alive and well over the next several months… stocks should keep powering higher. 

As such, we are very bullish on stocks for the foreseeable future. 

Find out what stocks we’re eyeing to drive some gains in this bull rally.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post The Three Catalysts Sending Stocks to the Moon appeared first on InvestorPlace.

First, we had the presidential election on Tuesday. While many didn’t expect it to be called so quickly, it became clear that Donald Trump won in the early morning hours on Wednesday after he did a lot better than people thought he would. (I sent a special election video reaction message to Market 360 readers yesterday, which you can view here.)

But there was another market event that we need to talk about today. And, under normal circumstances, it would dominate the headlines.

I’m talking about the Federal Reserve’s November Federal Open Market Committee (FOMC) meeting, which concluded today. At the last FOMC meeting, the Fed cut rates by 0.5% – the first rate cut since March 2022. It also noted that a few more cuts should be expected before 2025.

In today’s Market 360, we’ll discuss the Fed’s most recent rate cut decision. But before we do, we need to review two key reports from last week that likely influenced the decision: the October payroll report and the latest Personal Consumption Expenditures (PCE) report. Plus, I’ll share which of these events could spark a new surge in the markets… and how you can stand to profit.

Making Sense of Last Week’s Reports

Last Thursday’s PCE report showed headline PCE rose 0.2% in September and 2.1% in the past 12 months. Meanwhile, core PCE, which excludes food and energy, rose 0.3% and was up 2.7% in the past year.

Now, I want to remind you that core PCE is the Fed’s favorite inflation indicator. So, while there is still a way to go to reach the Fed’s 2% inflation target, it’s clear that inflation is moderating.

Then on Friday, we had a disastrous payroll report. The Labor Department reported only 12,000 payroll jobs created in October, far lower than the consensus estimate of 100,000.

The news worsens with the details: The Bureau of Labor Statistics revised down August and September by a cumulative 112,000 jobs. We’ve also now lost 46,000 manufacturing jobs, although some of this is due to the ongoing struggles of The Boeing Company (BA). Additionally, the number of unemployed people has risen by 150,000 people. The unemployment rate remains unchanged at 4.1%, however, because the workforce is shrinking.

All in all, this payroll report was a statistical mess and will likely need to be revised when we have more information. But it also drove Treasury yields lower and increased pressure on the Federal Reserve to cut key interest rates, since the Fed is now more worried about the job market than inflation.

The Fed’s November Rate Cut

As expected, the Fed cut interest rates by 0.25% today. So, let’s dig into the details…

When the Fed cut rates in September, there was a dissenting vote for the first time in 19 years. But this time around, it was a unanimous decision. However, when it came to future rate cuts, the Fed offered little clarity. And to be honest with you, any cuts beyond today’s are now up in the air.

That’s because the U.S. dollar is back at its highest level in three months. Treasury yields have been marching higher in response to the “Trump trade” and the anticipation of a larger federal deficit. (I wrote about this in detail in a previous Market 360, which you can read here.)

In fact, as I write this now, the 10-year Treasury yield sits at about 4.33%, up from 3.64% in September. And historically, the Fed does not like to be out of line with market rates. So, with this cut, the Fed is now much closer to the market.

Now, the committee’s official statement acknowledged that it “judges that the risks to achieving its employment and inflation goals are roughly in balance.” This is interesting because the Fed also removed the language from its September statement that it had “gained greater confidence” of inflation moving towards its 2% target.

In other words, the Fed is now equally worried about the employment situation and inflation. And that matters because it has a “dual mandate” or achieving optimal levels of both.

Then, during Fed Chair Jerome Powell’s press conference, he stated:

We know that reducing policy restraint too quickly could hinder progress on inflation. At the same time, reducing policy restraint too slowly could unduly weaken economic activity and employment. Considering adjusting the federal funds rate, the committee will carefully assess incoming data, evolving outlook and balance of risks. We are not on any preset course. We will continue to make our decisions meeting by meeting.

Essentially, we are now in a waiting game. Personally, I do expect the Fed to pause rates, meaning we will not get a rate cut in December. But we will have to keep one eye on the economic data and one eye on the Treasury market.

Market’s Next Surge Begins With Trump

From last week’s inflation reports to this week’s Fed decision, each has impacted the markets. But arguably the biggest impact came from Donald Trump’s victory. On Wednesday, the Dow jumped more than 1,500 points, the S&P 500 jumped 2.5%, while the NASDAQ surged 3%. Following today’s FOMC meeting, the NASDAQ climbed 1.5%, the S&P 500 rose 0.7%, while the Dow is relatively flat.

The fact is, with this victory, there has never been a more opportunistic and exciting time to be an investor. It’s like we’re on the cusp of the Roaring 20s… America’s railroad expansion… and the Dotcom boom all over again. That’s because Trump is going to spark a growth explosion without precedent.

What you need to understand is that Trump is all about business. And when he returns to the Oval Office, his first act could be like rocket-fuel to the AI industry. He knows what it needs to help it reach its true potential and he’s going to make sure it gets it.

Therefore, this Trump presidency means a second boom is coming for AI stocks… starting as soon as today. Because before he does anything else, I believe Trump is going to issue an executive order that will hand a fortune to a small subset of AI stocks.

The big returns recently made in AI stocks could pale in comparison to the abundance that’s coming. And I see six specific AI stocks that will benefit from this coming boom.

Click here to learn more about what the Second Wave of the AI Boom is and how you can profit from it.

Sincerely,

�������°�

Editor, Market360

The post The Federal Reserve Cut Rates – Are More on the Way? appeared first on InvestorPlace.

There’s an old Aesop’s fable known as “The Hound and The Hare.” The story reads… 

One day, a shepherd sees a hound chasing a hare. After a long run, the hound gives up and lets the hare go. The shepherd mocks the hound, saying, “The little one is the best runner of the two!” 

“You do not see the difference between us,” the hound replies. “I was only running for a dinner. He was running for his life.” 

This fable now illustrates Intel Corp.’s (INTC) predicament.  

The chipmaker, which we called finally too cheap to ignore in Fry’s Investment Report back in September, has been a hare racing for its survival. The company’s formerly world-class chip factories (fabs) have fallen behind its competition, and relative newcomer “hounds” like Qualcomm Inc. (QCOM) and Advanced Micro Devices Inc. (�������°�) are attempting to eat Intel’s market for lunch. 

To help America’s last high-end chipmaker, the Biden Administration passed the CHIPS and Science Act in 2022. The act promised $280 billion in new funding to develop and manufacture the domestic semiconductor industry. Intel was meant to be the single-biggest beneficiary, with $20 billion earmarked in a combination of grants and loans. This was the equivalent to a hare receiving a jet pack. 

The calculus, however, was upended on November 6 after Donald Trump won the 2024 presidential election. His party previously called for a repeal of the CHIPS Act, and Republican control of both Congressional houses means the Biden-era package could quickly get nixed.  

Intel’s $20 billion lifeline may disappear before a single dollar gets distributed. 

So, what does this mean for the future of the chipmaker… and U.S. chip manufacturing? 

What’s Next for Intel? 

Intel’s situation highlights an uncomfortable truth now facing a new Trump administration. On the one hand, Trump remains vocally suspicious of virtually all of Biden’s industrial policies. He has vowed to pull back many of the Inflation Reduction Act’s unspent dollars, which he has called the “Green New Scam” and a “waste” of money. He has pledged to cut back on regulations limiting gas-powered vehicles. And it’s not hard to see why the CHIPS Act could be on the chopping block as well. 

On the other hand, the incoming administration knows that Intel remains America’s best bet on domestic chip production. Trump has long maintained an “America First” mindset, where U.S. players are protected at foreign expense. His first term included steep tariffs on imports, from raw steel to washing machines. That means saving the U.S. chipmaking business must involve Intel simply because there are no other companies. Fabs like GlobalFoundries Inc. (GFS) focus on lower-end kit, while designers like Qualcomm outsource all manufacturing. 

We believe the latter scenario will eventually win out. Intel remains far too strategically important, and as Eric says, “If not Intel, then who?” 

The mechanics might look complicated. The Trump administration might rebrand existing legislation, like the CHIPS Act, as its own creation. 

In the meantime, Intel has been focusing on self-help. On October 31, the chipmaker announced its first meaningfully positive results in a year. Its data center and AI segment saw a 9% jump in revenues. 

More specifically, Intel reported that overall revenues had increased 4% sequentially to $13.2 billion, beating estimates by 2%. Adjusted net income of $726 million beat expectations of a $105 million loss.  These results were driven by a $10 billion cost-reduction plan, strong demand for its 18A chips, and good progress on its manufacturing roadmap. Intel CEO Pat Gelsinger confirmed that Intel would manufacture its own next-generation Panther Lake processors starting late next year. 

Management also raised full-year guidance. The company’s executives now expect sales to rise 4% sequentially, soothing fears that demand was in total freefall. 

The news drove an 8% surge in share prices. 

Meanwhile, Intel’s competitors are beginning to see how difficult it can be to compete against the legacy firm. Shares of Qualcomm have stagnated as it faces a patent battle with its chip designer, Arm Holdings plc (ARM). Last week, Arm gave the required 60-day notice to cancel its Qualcomm contracts, escalating their legal feud, and showcasing the benefits of Intel’s vertical integration. (Unlike Qualcomm, Intel holds the key patents to its own chip designs.) 

As for �������°�, Intel’s keenest rival saw a 16% pullback in share price last week after announcing lower-than-expected fourth-quarter guidance. The upstart is quickly finding how hard it can be to maintain high percentage gains from a larger base. 

Intel Is Still a “Buy” 

Of course, Intel remains a risky play. Its bold plans to leapfrog a generation of chips could backfire, leaving the firm even further behind competitors. It will drop out of the Dow Jones Industrial Average tomorrow, which tends to pressure shares in the short run as index-tracking funds sell their holdings.  

Perhaps most importantly, the firm lacks the momentum that its rivals have. During the earnings call, Gelsinger admitted its Gaudi AI-accelerator chips are “not going to achieve” prior revenue targets. 

But INTC shares are cheap, and the incoming Trump administration knows the firm is running for its life. As third-quarter results show, Intel is currently running fast enough to survive. And if it receives the help it needs, it might someday perhaps even thrive. 

Regards, 

Thomas Yeung

Markets Analyst, InvestorPlace 

The post What a Trump Presidency Means for U.S. Chip Manufacturing  appeared first on InvestorPlace.

Of course, that has major implications for both the U.S. economy and the stock market.

Today, stocks are celebrating this news. The market is rallying more than 2% across the board, paced by huge gains in tech and financial stocks, especially small caps. Cryptos are joining the party, too, with Bitcoin (BTC/USD) now surging to all-time highs. 

But despite today’s red-hot rally, investors and voters alike now face many unanswered questions. Will this party last – and if so, for how much longer? What about the future of oil prices, inflation, and interest rates? Which stocks should benefit most under Trump, and which will get hit hardest?

We’ve spent the last several hours dissecting these questions and parsing years of market data in search of answers. And that research has helped us to compile a list of 10 major market implications now that Trump is set to be our next president. 

So, without further ado, let’s dive right in to see how we should prepare for Donald Trump’s second term in office. 

1: Stocks Will Go Higher

With Republican control of both the House and the Senate, Trump should be able to extend and make permanent the 2017 Tax Cuts and Jobs Act. Those tax cuts should stimulate economic confidence and power more consumer spending and economic investment – the sum of which will drive corporate earnings higher in 2025 and ‘26. Additionally, Trump should be able to reduce the corporate tax rate from 21% to 15%, which Goldman Sachs estimates will boost EPS by ~4%. All up, we expect earnings should rise about 15% per year into 2026, creating a very compelling runway for further stock price gains regardless of valuations. Not to mention, during Trump’s first term (pre-COVID), the S&P 500 rose ~40% from January 2017 to December 2019. We think a repeat is possible.

2: Oil Should Stay Flat, But Inflation Will Be a ‘Wild Card’ 

We believe that oil prices will likely flatline over the next 12 to 24 months, with growth in U.S. economic activity balanced by headwinds related to increased domestic oil production. If prices hold around $70, inflation should remain between 2% to 3%. However, stronger U.S. growth in 2025-26 could present upside risks to inflation; though past trends under Trump in 2017-19 showed relatively stable inflation. As such, we view inflation as a ‘wildcard’ risk.

3: Interest Rates Are Also a ‘Wild Card’ 

The path forward for interest rates and Treasury yields seems uncertain, as it will hinge largely upon inflation levels over the next few quarters (which, as stated above, is uncertain). If Trump’s pro-economic and protectionist policies do create more inflation, which seems likely, then interest rates will not decline as much as the market expects. The market is currently pricing in four rate cuts into the end of 2025 (roughly unchanged from pre-election estimates). If inflation does reheat over the next few months, we will likely only get two or three cuts, and Treasury yields will rise. If not, four-plus cuts remain on the table, and Treasury yields should fall. We will have to wait for more data from the early months of Trump’s next term before we make a call on the path forward for interest rates.

4: Big Upside in Stocks Will Hinge on Inflation, Interest Rates, and Valuation 

While we think stocks have good upside prospects over the next 12 to 24 months, spectacular upside potential will depend on the path forward for inflation and interest rates. If inflation stays low and interest rates keep declining, then valuation multiples on the S&P 500 will expand, powering strong upside in stocks. However, if inflation rises and interest rates stay high, valuation multiples on the S&P 500 will compress, limiting upside in stocks. Currently, stocks are trading at ~20X forward earnings, adjusted for Trump tax cuts in 2025 (assuming the 4% boost estimate from Goldman Sachs). That implies a 5% forward earnings yield, which is still above the 10-year Treasury yield’s 4.45%. If Treasury yields stay at or below 4.5%, stock multiples can expand and drive additional upside in stocks (beyond earnings growth). But if yields climb toward and potentially even above 5%, multiple compression will limit gains. 

This economic dynamic is arguably the most important of Trump’s presidency. And as of now, it’s unclear how it will play out. If inflation stays low and interest rates keep falling, stocks could rally more than 30% over the next two years. But if inflation reheats and interest rates stay high, stocks may only push marginally higher. It will become clearer in early-to-mid 2025 how Trump policies will impact the path of inflation. Until then, we don’t think anyone should be making a bold call here. Rather, we should continue assessing the monthly inflation data as it comes in. 

5: Large-Cap Stocks Will Continue to Outperform

While small caps have outperformed in the day after Trump’s latest victory, history suggests that his tax cuts, tariffs, deregulation, and other economic policies are actually better for large caps. From 2017 to 2019, the S&P 500 large-cap index rallied about 43%, while the S&P 600 small-cap index rallied just 20%. In other words, the last time Trump was president, large-cap stocks outperformed small caps by more than 2:1 (pre-COVID). Therefore, we think that large caps – which have led the market rally since late-2022 – will continue to lead while small caps will likely continue to lag.

6: Growth Stocks Will Remain the Winners 

Trump’s policies should stimulate economic growth, which means they should be good for growth stocks. In practice, this has been true. From 2017 to 2019, the S&P 500 Growth index rallied 58%, while the S&P 500 Value index rose just 27%. Similarly, the Russell 2000 Growth index rose almost 40%, while the Russell 2000 Value index rose less than 10%. In other words, across all market-cap spectrums, growth stocks outperformed value stocks during Trump’s last term (pre-COVID). And large-cap growth stocks outperformed small-cap growth stocks. We think a repeat of this performance is possible. Therefore, we see growth stocks continuing to outperform value stocks over the coming years.

7: ‘New-School’ Growth Stocks Should Be the Biggest Winners

While growth stocks have performed exceedingly well in this AI Bull Market, so-called ‘new school’ growth stocks – those of smaller, disruptive tech startups – have lagged. The best benchmark for these ‘new schoolers’ is Cathie Wood’s ARKInnovationETF (ARKK). Over the past two years, it has lagged the large-cap Nasdaq 100 index. But in the early innings of Trump’s first term, it was one of the biggest winners, with ARKK rising almost 150% from 2017 to 2019. This is likely because Trump’s economic policies were pro-innovation and pro-startup. We think a repeat is possible. And considering J.D. Vance’s connections to Silicon Valley and the startup tech world, the gains could come with even more momentum this time. That’s why we think those ‘new-school’ tech stocks will be huge winners over the next few years.

8: Clean Tech Stocks Will Crash; But Nuclear Stocks Could Surge

While the stock market surged higher today, not all stocks joined the party. Clean tech stocks, for example, broadly crashed, led by double-digit declines across many solar, wind, hydrogen, EV, and energy storage stocks. That is because Trump will likely eliminate green-energy tax credits in the Inflation Reduction Act and push for a shift away from the deployment of clean energy across the U.S. We think solar, wind, hydrogen, EV, and energy storage stocks will struggle under a Trump presidency. However, nuclear energy stocks are rallying today, likely because Republicans have broadly adopted a pro-nuclear stance. We can see nuclear becoming the “go-to” clean energy source under a Trump presidency and believe that nuclear energy stocks will perform very strongly over the next few years.

9: Financial Stocks Should Be Outperformers 

As deregulation and stronger economic growth unlocked enhanced profit growth for financial firms, financial stocks were huge winners during Trump’s first term. We think the next few years should be a repeat of that. With Republican control of both the House and Senate, Trump will likely continue to deregulate the financial industry, leading to strong profit growth for banks, lenders, and other related firms. The market seems to think that credit service companies like Discover Financial Services (DFS) and Synchrony Financial (SYF) will be huge winners; they were two of the best-performing stocks today. We see that bull thesis and largely agree with it.

10: Real Estate Stocks Could Struggle

Like that of clean energy, real estate stocks largely failed to join today’s market rally, likely because of the interest rate ‘wildcard’ risk cited above. A Trump presidency could mean higher interest and mortgage rates. And if that’s the case, the housing market – which has been frozen by high rates for the past two years – will likely remain frozen, regardless of how well the economy performs. As such, we think that real estate stocks have considerable risk exposure to a Trump presidency. Though, if early data suggests Trump’s policies are not creating more inflation, that risk could be eliminated. We will wait and see.

The Final Word on Preparing Your Trump Trade

Overall, we think Donald Trump’s latest victory offers both market opportunities and risks. 

While the opportunities are very clear (upside impact on EPS), the risks remain obscure (downside impact on valuations through higher rates). So long as that remains the case, stocks will likely march higher. 

That’s why we think stocks are set to soar over the short term. 

Additionally, we think that if 2025’s data shows that inflation is not accelerating, the downside risks here could be eliminated. If so, then the stage will be set for continued stock market strength for the foreseeable future. 

And… if we do get a strong bull market in 2025/26… it will likely be led by large-cap growth stocks – especially in the tech, financial, and consumer industries. 

The investment implication? 

Focus on growth stocks in the tech, financial, and consumer sectors. And consider adding some exposure to disruptive ‘new-school’ tech stocks. 

For now, that investment game plan should be a strong one. 

Check out what we’re doing right now to prepare for Trump’s second term in office.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Investing Under Trump: How To Maximize Your Market Gains appeared first on InvestorPlace.

Let’s skip right to what you came here for: the type of stocks to buy under Trump’s second term.

Many investors expect a Trump administration to have significant implications for the stock market and various sectors of the economy. Indeed, the markets are buzzing with certainty for the near-term, but is that accurate? And how will the long-term pan out?

In the near-term, stocks are projected to rise, potentially mirroring the 40% increase in the S&P 500 during Trump’s first term. This optimism is fueled by anticipated tax cuts, including a reduction in corporate tax rates, which could boost earnings per share (EPS) and stimulate economic growth.

While oil prices are expected to remain stable, inflation remains a wildcard under a Trump administration. The path of interest rates is uncertain, hinging on inflation trends. The market currently anticipates four rate cuts by the end of 2025, but this could change based on economic data in the early months of Trump’s administration.

The extent of stocks to buy under Trump will depend on inflation, interest rates, and valuation multiples. If inflation stays low and interest rates decrease, stock valuations could expand significantly. However, if inflation rises and interest rates remain high, stock upside may be limited.

Large-cap stocks are expected to outperform small caps, based on historical trends from Trump’s previous term…

Growth stocks, particularly in the technology sector, are anticipated to be the biggest winners…

“New-school” growth stocks, represented by disruptive tech startups, could see substantial gains, potentially outpacing their performance during Trump’s first term…

Clean tech stocks are expected to struggle under Trump due to the likely elimination of green-energy tax credits. However, nuclear energy stocks could surge as Republicans have adopted a pro-nuclear stance…

Financial stocks are projected to be strong stocks to buy under a Trump administration, benefiting from deregulation and stronger economic growth…

Real estate stocks may face challenges if interest rates and mortgage rates remain high, potentially freezing the housing market. The sector’s performance will largely depend on how Trump’s policies impact inflation and interest rates in the coming months…

Overall, the market implications of Trump’s victory suggest a period of economic growth and stock market gains, with particular sectors poised for significant outperformance.

However, do not take your eye off the ball now; you should remain vigilant about inflation and interest rate trends, as these factors will play a crucial role in shaping market dynamics during Trump’s presidency.

Transcript coming soon.

P.S. My colleague �������°� believes Trump’s presidency could trigger a second boom in AI stocks. He’s identified six specific AI companies that could benefit significantly in the near-term from this shift.

To learn more about these potential AI opportunities and why Louis is so bullish, click here for his exclusive analysis.

We’ll be back later this afternoon with our regularly scheduled Hypergrowth Investing issue.

Stay informed and make the most of these market shifts. Your portfolio will thank you.

The post My Urgent Election Debrief appeared first on InvestorPlace.

Well, it looks like Donald Trump did a lot better than a lot of folks thought and is going to become the 47th President of the United States.

I just recorded a short video to answer the question on all of our minds…

“Now that Donald Trump has won the presidency, what is going to happen in the markets?”

Overall, I would say let’s just keep our eye on the ball and keep moving ahead. But I do want to say – no party has a monopoly on bull markets or bear markets.

Over the long haul, the thing to focus on before election – and after – an election, during the is the most powerful trend of the moment.

You can see all my thoughts this morning, along with the transcript, below.

Meanwhile, my colleague �������°� is saying that a Trump presidency means a second boom is coming for AI stocks… starting as soon as today.

And he has six specific AI stocks in his crosshairs. Click here to find out why Louis believes Donald Trump’s election will launch a second boom in AI stocks.

Transcript

Hi there. I’m �������°�. Welcome to this brief presentation, post-election.

Now that the election has been held, we can hopefully get back to the business of focusing on the stock market without a ton of outside distraction.

But I do want to say a couple things about politics and investing.

One is that no party has a monopoly on bull markets or bear markets.

The stock market crash of 1929. Black Monday in 1987. The Bear market of 2008-09. Those all happened under Republican administrations. On the other hand, the big dot-com implosion of 2000. That was under a Democratic administration. And the same is true of bull markets. They can thrive under any combination of political structures – mixed Congress, Republican, Democrat.

So, I generally don’t focus too much on those aspects.

We have to pay attention to them because they influence policy, especially in things like the oil & gas market or in the pharmaceutical industry. There are definitely political influences that matter.

But over the long haul, really, the thing to focus on before an election, after an election, and during an election is the most powerful trend of the moment.

What are the most powerful trends? We have been writing a lot about artificial intelligence. That remains a very powerful trend. That is creating investment opportunities today, and will continue to do so over the years ahead.

I have recommended both investing directly in it through stocks like Oracle Corp. (ORCL) and earlier things like Amazon.com Inc. (AMZN) and Alphabet Inc. (GOOGL). We closed those positions out, but I still think there are still direct ways to play it.

But as regular readers know, I’m more focused on finding the support industries for artificial intelligence.

Things like nuclear power. Therefore, a uranium investment.

Things like what I just recommended in the water industry: water treatment. That’s a big support industry for data centers, which supports artificial intelligence.

Things like Corning Inc. (GLW), which just reported great earnings.

Things like some of the metals industries. Those are the industries that have the opportunity to thrive again, no matter what the political framework is.

By the same token, I’ve been a big advocate of AI healthcare and trying to invest in those industries.

We had earnings reports recently from Bristol-Myers Squibb Company (BMY), from Incyte Corp. (INCY), from Roche Holding AG (RHHBY) that were all excellent. And those companies, those stocks, performed very, very well in the last couple of weeks.And I think that will continue over the next year or two or three, largely fueled by advances from artificial intelligence.

Lastly, oil & gas. That’s a politically charged industry. But, again, I like the industry – especially natural gas – because of its potential to support the data center industry in Texas. Natural gas is depressed, and it can produce outstanding returns.

Those stocks can even without any kicker from data centers. But I think we’re going to get it. So, I like natural gas as a just a standard commodity play, but with a sort of call option on data centers.

So, those are just a few of the ideas. Overall, I would say let’s just keep our eye on the ball and keep moving ahead and investing in and identifying the most powerful long-term trends.

Thank you very much.

Take care… and Thomas Yeung will be back in touch tomorrow with your regularly scheduled Smart Money.

Regards,

�������°�

Editor, Smart Money

The post My Urgent Election Debrief appeared first on InvestorPlace.

I just recorded a short video to answer the question on all of our minds:

“Now that we know Donald Trump has won the presidency, what is going to happen in the markets?” You can see my answer by clicking here or on the screenshot below.

In short, Trump wants to convert us to an economy where tariffs pay a lot more of our budget. But the main thing I want you to know is that he will probably try to enact some tax cuts and increase the velocity of money so that the economy can grow and prosper.

But the bottom line is that I think we’re going to have a boom in America finally.

Just click here or the screenshot below to see all my thoughts this morning.

Meanwhile, I have been saying for months that a Trump presidency means a second boom is coming for AI stocks… starting as soon as today.

And I have identified six specific AI stocks that are set to take off…

Click here to find out why I believe Donald Trump’s election will launch a second boom in AI stocks now. Take care… and I will be back soon with your regularly scheduled Market 360.

Sincerely,

�������°�

Editor, Market360

The post My Urgent Election Debrief appeared first on InvestorPlace.

As Americans prepare to elect a new president, U.S. home prices are up nearly 40% since 2020, while the average 30-year fixed rate mortgage has more than doubled.

Not a great combination for affordability.

Since summer of 2023, overall affordability has become so bad that the average age of a homebuyer has jumped from 49 to 56, according to the National Association of Realtors (NAR).

Meanwhile, the share of first-time homebuyers has dropped from 32% to 24%. This the lowest percentage since the NAR began tracking the metric back in 1981.

CNBC points out that the median house price in the U.S. is now 5.8 times more than the median annual income of $80,000. For context, back in 1990, prices were only 2X median income.

Here’s Hannah Jones, senior economic analyst at Realtor.com with the bottom line:

[Today’s housing market] is the least affordable in 40 years and suffers from low inventory levels.

Buyers in today’s market face high prices, high mortgage rates, and low levels of affordable inventory, making it exceptionally challenging to purchase a home as a first-time buyer.

In the background, we have both Vice President Harris and former President Trump claiming they’ll fix this broken housing market…

Neither is correct.

One of Harris’ proposed solutions is to give $25,000 in down payment assistance to first-time homebuyers. First, let’s look not overlook that price tag.

Using data from the NAR and the U.S. Census Bureau, we find that, historically, first-time homebuyers average around 30% – 35% of home sales.

In 2023, the NAR estimated roughly 5.2 million existing home sales annually in recent years, translating to around 1.65 million first-time buyers per year.

So, $25K times 1.65 million first-time home buyers equals $41.25 billion.

Peanuts!

What’s another $41ish billion in light of today’s fiscal deficit of $1.7 trillion? Chump change!

Forgetting who will eventually pay for this in one form or another (you, the above-average-earning taxpayer), will it help the broken housing market?

No. It’ll simply make home prices even more expensive, rewarding those who currently own homes today.

The trillions of dollars of federal stimulus that flooded the economy, eventually funneling into the housing market.

Below, you can see M2 Money stock (in red) exploding higher beginning in 2020 thanks to pandemic-related federal money-creation/flows. Shortly thereafter, the median sales price of U.S. homes (in blue) ramps up as money floods the housing market.

If a tsunami of free money had this impact before, might a mini tsunami of free money have a similar-yet-reduced impact again?

Well, let’s follow the logic. What happens when millions of would-be homebuyers suddenly have thousands more dollars to use for a home purchase?

• They raise their offer prices or bid on higher priced homes than otherwise…
• So, there are now more bids for those homes, with some of those bids now at higher prices than before…
• Homeowners do the logical thing based on this added demand and higher offer prices – they raise their asking prices…
• The highest government-aided bid wins at a higher price than would have otherwise been the transaction price…
• The housing market continues to be frozen, penalizing the next generation of would-be homebuyers…until some new politician promises another free money giveaway (most likely, on your dime).

Now, Harris has also proposed incentivizing new home construction. Adding new supply to the market would help.

Unfortunately, the biggest obstacle to new housing construction comes from state and local bureaucracy with its zoning and policy restrictions. The federal government has limited, if any, ability to fix this. We’ll circle back to this point in a bit.

Great. How?

Even if Trump forced the Federal Reserve to slash interest rates (which he can’t do), that wouldn’t necessarily relieve elevated mortgage rates. We’re currently living through this reality.

The Fed cut interest rates 50-basis points in mid-September. Since then, then the average 30-year fixed rate mortgage has jumped from 6.09% to 6.93% as I write Tuesday morning.

This is because the biggest influence on mortgage rates isn’t the Fed and the Fed Funds Rate (which Trump can pressure), it’s the 10-year Treasury yield. And the 10-year Treasury yield is impacted by many variables that no president can directly influence.

Unfortunately, Trump cannot bring down mortgage rates any more than I can.

One, mortgage rates remain somewhat elevated, which maintains the deep freeze in today’s housing market. Bad for would-be homebuyers.

Two, mortgage rates fall significantly. This leads to a stampede of buyers who push home prices higher. So, whatever affordability gains were achieved from lower borrowing costs are offset by higher listing prices. Again, bad for would-be homebuyers.

Three, we don’t get a soft landing. We fall into a painful recession which has a deflationary impact on the housing market. Mortgage rates and home prices come down in a major way, but for reasons no one wants. Bad for would-be homebuyers and everyone.

Fortunately, this is unlikely. Unfortunately, what’s equally unlikely is Harris or Trump waving their respective policy magic wands and lowering home prices nationally over the next 12 months.

One, a continuation of the widening division between the “haves” and “have nots” here in the United States.

Those with assets (like homes) will continue watching their net worths climb. Those without assets will continue to feel the strain of the last four years of higher prices on basic cost-of-living goods/services. Remember, even though inflation has fallen, absolute prices haven’t dropped.

We’ve spilled plenty of ink on this division in recent quarters. If you’re new to the Digest, here’s a quick snippet from The Wall Street Journal that sums up the issue:

The third year of America’s inflation fight is widening a split at the heart of the economy.

The stock market is soaring, household wealth is at record levels and investment income has never been greater. At the same time, some families’ pandemic-era savings are running dry, and delinquencies on credit card and auto-loan payments have jumped.

Warning signals are flashing for more low- and middle-income Americans, exposing a division between people whose gains are being whittled down by elevated inflation and borrowing costs and those who are benefiting from high asset prices and bond returns. The crosscurrents are scrambling the outlook for the U.S. consumer—a bedrock of economic growth, corporate business plans and Wall Street investments.

This angle is huge, and we’re going to continue tracking it, though not in today’s Digest due to limited space.

Harris is correct in identifying new home construction as a huge part of the answer to today’s frozen housing market.

Now, state-by-state regulation issues we highlighted earlier leave us skeptical on a president’s ability to address this problem, but this frozen housing market is favorable for homebuilders in targeted areas.

This is why we’re still bullish on our homebuilders trade, the iShares Home Construction ETF, ITB. It holds homebuilding heavyweights including DR Horton, Lennar, NVR, Pulte, and Toll Brothers.

We suggested aggressive traders could buy ITB back on April 20, 2022. Since then, ITB is up 107% while the S&P is up just 29%.

But let’s take it one step farther, building on my “targeted areas” qualifier a moment ago…

If you want to pick specific homebuilding stocks that should outperform a broad ETF, keep your eye on two variables: population migration and state regulations. Clearly, you want to buy homebuilders that operate in states with population inflows, that also have friendly stances toward construction.

Based on data from the U.S. census and the World Population Review, we know that people are leaving California, New York, Illinois, and Hawaii. Plus, restrictive zoning and construction regulations make building new homes in some of those states incredibly challenging.

On the other hand, states seeing huge inflows include Florida, Texas, Arizona, and the Carolinas. These states’ regulations are also generally far more friendly to new home construction.

To help you begin your research, DR Horton and Lennar Corporation have big footprints in Florida and Texas. Meanwhile, LGI Homes is active in the Carolinas.

KB Home and Toll Brothers operate in some of those blue states with more restrictive policies. So, you’ll want to investigate how much of their revenue comes from those states.

In recent weeks, it has pulled back as mortgage rates haves jumped higher and election anxiety has weighed on the market. ITB has fallen nearly 7% since mid-October. And based on how today’s election turns out, it could fall further.

We would view any such pullback as a buying opportunity. In other words, volatility would be a good thing.

Speaking of “volatility as a good thing,” one week ago, legendary investor �������°� and Charles Sizemore, the Chief Investment Officer at our corporate partner, The Freeport Society held their “Day After” Summit. Much of it focused on how to trade election-based volatility. Louis even gave away a free trade, noting “I believe it will pay off no matter who’s eventually declared the winner.”

We’ve made a free replay of the event over the last week. But I’m told that we’re taking it down tonight at midnight. If you’d like to watch it for free before then, here’s your chance.

But if not, expect market volatility – which means look for opportunities.

As to housing, neither Harris nor Trump can bring down home prices. But that’s going to be a tailwind for ITB and well-positioned homebuilding stocks as we look ahead to 2025.

Have a good evening,

Jeff Remsburg

The post Why Neither Harris nor Trump Can Fix the Housing Market appeared first on InvestorPlace.

At least, that’s the hope.

But there’s a very real possibility we may not know who won the presidential election right away.

If it’s close, like the polls say, then we may have to wait until all the ballots are counted. And that’s before we even consider the possibility of a contested election…

When judges and lawyers get involved, the timeline is anyone’s best guess. As I recently discussed during my “Day-After Summit” with Freeport Society’s Charles Sizemore, we could see a nasty bout of volatility in the market until the dust settles.

So, in today’s Market 360, I want to discuss where things stand – and why this election matters for investors. I’ll also tell you more about how you can best prepare – and even set yourself up to profit – from the potential chaos before the results start coming in tonight.

Where Things Stand Right Now

As of right now, Real Clear Politics has Donald Trump winning the presidential election with 287 Electoral College votes. Remember, a candidate needs 270 Electoral College votes to win.

The betting markets seem to agree. Bespoke Investment Group gives President Trump a slight edge over Vice President Kamala Harris, with a 58.5% probability of winning the election. Republicans are heavily favored to gain control of the Senate, while the Democrats have a razor-thin edge to retake control of the House of Representatives.

So, we could end up with a divided government when all is said and done.

Interestingly, the “Blue Wall” manufacturing states of Michigan, Pennsylvania and Wisconsin, which traditionally vote for the Democratic Party, will ultimately determine the winner tonight. Real Clear Politics has Trump winning Pennsylvania but losing Michigan and Wisconsin.

The reality is that the U.S. manufacturing sector has been in a recession for over two years. The Institute of Supply Management (ISM) recently announced that its manufacturing index declined to 46.5 in October, down from 47.2 in September. Any reading below 50 signals contraction. Notably, 11 of the 16 industries surveyed reported contraction in October.

So, the big manufacturing states of Pennsylvania, Michigan and Wisconsin will certainly keep this in mind as they head to the polls today.

If a new presidential administration can help the manufacturing sector expand via tariffs against unfair competition overseas, lower interest rates (with the Federal Reserve’s help) and cheaper energy prices that give the U.S. a natural advantage compared to Europe, Japan and other competitors… then, in theory, the U.S. should experience a manufacturing boom.

Hope for the Best, Prepare for the Worst…

Hopefully, by midweek, all of the uncertainty surrounding the election will finally be lifted. I certainly hope this will be the case. And regardless of who wins, I certainly wish any new president the best.

You may recall the last time we had a significant peace dividend was in the 1990s when Bill Clinton was in the Oval Office after communism fell and the USSR broke up. Then, the dot-com boom took off, and we enjoyed a long period of prosperity – and generational returns in the stock market.

But despite what we hope, the reality is that we have to plan for the worst.

Because the more people panic in the chaos after the election – especially if the results drag out for days, weeks or months…

The crazier and more out of whack the will markets get.

But if you watch my Day-After Summit with Charles, you’ll be prepared. Because it’s times like these when agile traders and investors stand to make the most. To help get you started, Charles is sharing his post-election pick for FREE. It’s historically gone up 100% of the time right after presidential elections between the specific dates he shares in the briefing.

Go here to check out “The Day-After Summit” now. My publisher will be taking this special briefing offline at midnight tonight, so time is running out to watch it and get Charles’ free pick.

Sincerely,

�������°�

Editor, Market360

The post What Tonight’s Election Means for the Market (and Investors) appeared first on InvestorPlace.

Now, that’s a big deal for a lot of reasons. 

But this time around, the question friends and family are asking most often is this: Does the stock market really care who wins the election? 

I don’t think so. 

Economically speaking, a Donald Trump presidency would likely bring more economic growth, but also higher inflation and interest rates. A Kamala Harris presidency, meanwhile, would likely bring less economic growth, but lower inflation and interest rates.

Either way, thanks to the ongoing AI Boom, stocks should keep pushing higher for the foreseeable future.

And as the historical data suggests, those gains should continue, regardless of who occupies the White House.

What 16 Years’ Worth of Market Data Reflects

We strongly believe that, no matter this election’s outcome, the AI investment megatrend will continue with vigor. 

Companies like Nvidia (NVDA), Amazon (AMZN), Apple (AAPL), Alphabet (GOOG), Microsoft (MSFT), Meta (META), and more will continue to spend billions upon billions of dollars to develop new AI applications and services. That means companies across all industries should keep rapidly adopting those new AI offerings to boost productivity. 

As a result, we see companies all across the country using AI to improve existing products, launch new offerings, and improve operational efficiency. That’ll drive revenues, profit margins, and profits ever higher. And, ultimately, it’ll drive stock prices higher, too. 

That’s why, regardless of who wins the White House tonight, we have a bullish outlook on stocks going into 2025. 

The data supports this perspective. 

Just consider: Since early January 2021, when President Biden began his term in office, the S&P 500 has rallied about 54%. From January 2017 to November 2020 – the same stretch in Trump’s presidency – the S&P 500 rose about 55%. And from January 2009 to November 2012 – during Obama’s first term – the S&P 500 rose about 52%. 

So… over roughly the first three years and 10 months of each of the last three presidencies… the S&P 500 rose a nearly identical amount – between 50% and 55%. 

Meanwhile, during this same timeframe under Biden’s presidency, the S&P 500 also experienced one big ~20%-plus correction. The same is true of Obama’s time in office. And throughout the same stretch for Trump’s presidency, the market suffered through two big ~20%-plus declines. 

So… over roughly the first three years and 10 months of each of the last three presidencies… the S&P 500 also suffered through one to two ~20%-plus corrections. 

It’s the same story with ~10% pullbacks as well. 

The Final Word

The S&P 500 endured one minor pullback under Biden, two under Trump, and three under Obama. 

Over roughly the first three years and 10 months of each of the last three presidencies, the stock market’s performance was exceptionally similar. 

�������°� a 50% return, either one or two major ~20% corrections, as well as one, two, or three ~10% pullbacks.

The point being: For the past 16 years, Wall Street hasn’t seemed to care much who has been in the White House. As such, it likely won’t care who resides there for the next four years, either. 

We’re bullish on stocks regardless of tonight’s election outcome, especially because we’re bullish on AI’s ability to continue unlocking operational efficiencies across the U.S. economy. 

With that said, we’re paying close attention to tonight’s election. But either way… we’re staying bullish on AI stocks… because they’ll likely win big regardless of who achieves the presidency tonight. 

That makes now a great moment to get positioned for more AI-driven gains.

Check out a few top AI stocks we’re watching closely right now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Election Day 2024: Sure Fire Stock Gains No Matter the Victor appeared first on InvestorPlace.

An utter mess.

That’s really the only way to put it.

On November 8, 2000, George Bush led Al Gore in Florida’s presidential election vote count by about 1,700 votes.

The national race was so close that the winner of Florida, with its 25 electoral votes, would become president.

With a differential of less than 0.5%, the Florida vote tally was so close that state laws triggered an automatic recount. Bush had a victory margin of just 317 votes.

Gore asked for a manual recount, and about two weeks later, Florida Secretary of State Katherine Harris certified a Bush victory. Gore sued, claiming all the recounts had not been completed at the time of Harris’s certification.

Fast forward another week, and on December 8, 2000, the Florida Supreme Court sided with Gore. You’ll likely recall the drama surrounding the “hanging chad” problem.

Bush then appealed to the Supreme Court. I won’t get into the mind-numbing legalese of its unsigned per curium main decision, but the takeaway was that, finally, on December 12, 2000 – more than one month after the vote – Bush won the presidential election.

And how did the stock market handle that month of uncertainty?

The Dow fell 5.3% and the S&P dropped 8.2%.

With that context, let’s jump to financial economist David Rosenberg from last week:

This will be the mother of all contested elections, replete with recounts and legal challenges.

It will be Gore vs Bush in November 2000 on steroids.

Here’s Louis from last week:

It doesn’t matter who you’re voting for. On Wednesday, November 6, unprecedented social strife could be unleashed as both sides contest the election.

This could be the most bitterly fought post-election battle in modern U.S. history – worse than Gore v. Bush in 2000 and Trump v. Biden in 2020.

It could also set off a chain reaction on Wall Street – including a bout of massive stock market volatility.

Keep in mind, there’s another source of potential volatility coming next week – the Fed’s November meeting.

While overshadowed by the election tomorrow, the Fed meets Wednesday and Thursday to decide its next move with interest rates. As I write Monday morning, traders put 99.8% odds on the Fed cutting rates by another 25 basis points.

The danger is that with this degree of certainty, if the Fed doesn’t follow through on a cut, Wall Street could see a tantrum-based selloff. And if tensions are already high due to the election outcome, that could be like dumping gasoline on a fire.

Here’s Louis’ take on the combination of the Fed decision and the election:

Right now, markets are expecting a quarter-point cut to follow the half-point cut we got in September. But it could be another half-point cut. Or the Fed could decide to leave rates where they are.

In normal times, Fed decisions are big market drivers. But this is coming right after perhaps the most contentious presidential election in modern history.

That could lead to even more severe stock market volatility as these two shocks hit our political and financial systems at once. Stocks could whipsaw violently as investors try to cope with all the uncertainty.

In a moment, we’ll circle back to how Louis is preparing for such volatility risk. First, let’s continue with the Fed and its rate policy decision next week.

To set the stage for why, let’s circle back to Federal Reserve Chairman Jerome Powell’s FOMC speech in September:

As inflation has declined and the labor market has cooled, the upside risks to inflation have diminished, and the downside risks to employment have increased.

Now, you’ll recall that, for months, the Fed echoed a refrain when asked about its interest rate policy: It would be “data dependent.”

So, based on the data, how have these risks changed in recent months?

First, on the employment front, here’s the unemployment rate beginning in July:

July: 4.3%

August: 4.2%

September: 4.1%

October: 4.1%

Now, we could nitpick the details, but we can at least conclude that the unemployment rate isn’t soaring out of control. Instead, it appears to be on a downward trajectory.

And what about inflation?

Well, let’s evaluate the Fed’s favorite inflation gauge: the core personal consumption expenditures (PCE) price index. Here’s the month-over-month data for the last four readings:

May: 0.1%

June: 0.2%

July: 0.2%

August: 0.2%

September: 0.3%.

Again, we could nitpick about the details, but at a minimum, we can conclude that inflation isn’t consistently falling. Instead, it appears to be on an upward trajectory.

As you look at these trends, what’s the greater danger? Labor market weakness or a resurgence of inflation?

To me, it looks like reinflation.

Maybe I’m wrong, but based on these data sets, might it be wise to wait just one more month to see how the numbers come in before cutting again?

Might it be wise to avoid a move that potentially juices an economy that needs no juice?

Last week, we cited analysis from Louis’ favorite economist, Ed Yardeni. He believes the Fed has miscalculated today’s neutral rate and is at risk of overstimulating the economy by over-cutting:

Our conclusion is that if the Fed continues to lower the federal funds rate, monetary policy will most likely stimulate an economy that doesn’t need to be stimulated.

The result could be rebounds in both price and asset inflation rates. The latter is certainly underway in the stock market.

So, what’s the case for the Fed holding rates steady later this week?

Well, here’s Bloomberg:

The chances that Federal Reserve officials will leave interest rates unchanged in November are mounting as the US economy powers ahead, according to Torsten Slok, chief economist at Apollo Management.

There are plenty of reasons for the robust US economy, in Slok’s view. A dovish Fed, elevated share and home prices, narrow credit spreads, as well as “wide open” corporate financing in both the public and private markets are just some of them.

And yet, traders are basically at 100% certainty of another cut. This is a recipe for volatility if the Fed disappoints.

Last week, he answered that question alongside Charles Sizemore, the Chief Investment Officer at our corporate partner, The Freeport Society.

They detailed why election uncertainty could drag on for weeks, like Bush/Gore in 2000… why that could send market prices on a rollercoaster ride… and a specific trading strategy you can use to transform volatility into profits.

Louis even gave away a free trade, noting “I believe it will pay off no matter who’s eventually declared the winner.”

To catch a replay of the free event, just click here.

Stepping back, here we go…

We’re about to see what happens when we combine one of the most bitter presidential elections in history, and a Federal Reserve decision that could upend near-certain Wall Street expectations.

Hang onto your hats.

Have a good evening,

Jeff Remsburg

The post Gore vs Bush “On Steroids” appeared first on InvestorPlace.

Hello, Reader.

Imagine watching NBA basketball, and LeBron James is having a terrific game.

He’s just made six shots in a row. The game is close. And James is lining up to take another jump shot.

What are the odds that he is going to make it?

In basketball, players and coaches will often talk about the “hot hand.” This refers to the phenomenon that someone who has made several baskets in a row has a greater chance of making the next one.

But that’s a fallacy. The odds that James will make his next shot remains the same, regardless of how many baskets he has made previously.

The belief in the “hot hand” is a well-studied example of “recency bias.”

If you’re unfamiliar with this term, you will certainly understand it if you’ve ever had an annual performance review at your job. Odds are that your supervisor remembers a lot of what you’ve done in the last month… but can’t remember work completed nine months ago. As a result, you’re more likely to be judged more for the last month rather than the last year.

This same bias could be affecting your portfolio, too.

In investing, “recency bias” occurs when a stock has momentum, either up or down. If a stock has been going up for the last six months, folks naturally believe it is likely to keep going up.

The inverse also happens: If a stock hasn’t gone up in six months, it seems likely it will not go up any time soon.

On a wider level, if it has been 10 years since the last bear market, investors are more likely to believe one is not coming soon.

However, you don’t need to rely on momentum to know which stocks to buy or sell. And you don’t have to let your future be governed by recency bias. All you need is the right tools.

That is why my InvestorPlace colleague �������°� revealed his powerful quantitative tool at his “Day-After Summit” last week.

The trades that the system has flagged have beaten the S&P 500 by 6-to-1 in back-tests going back to 1990. And of the 19 open trades in the core portfolio where this system is now in use, 18 are winners.

Folks who take advantage of this system will have the chance to get ahead of unpredictable market moves during political, economic, and financial shocks… like tomorrow’s presidential election is expected to bring. It will also give you the shot at rare short-term gains.

To learn more about this tool – and what to expect in the days after tomorrow’s election – click here.

Now, let’s look at what we covered here at Smart Money this past week…

Smart Money Roundup

Chaos Chronicles: How to Survive on This Runaway Train

InvestorPlace CEO Brian Hunt often says that we have entered an “Age of Chaos.” And, he says, it’s all thanks to several colossal megatrends slamming into the world simultaneously. In this guest issue, Hunt shares more about these“Chaos Agents” and how to play them right amid the turbulent election.

The Chaos in the Days After the Day After the Election Could Be Worse

The postelection havoc we’re all expecting could last long past inauguration day. While there’s a positive short-term outcome to both candidates’ spending and tax-cut promises, they come with consequences in the long-term. Thomas Yeung explains stock market trends following past elections and the implications for the next 6 to 12 months.

The Magnificent Seven’s Fate After Election Day

The Mag 7 have trailed the market this year. Admittedly, they haven’t trailed the market by much, and they have continued to produce nice double-digit returns. But as they ramp their spending on AI data centers and other projects, they will struggle to maintain their growth trajectories in 2025 and beyond. Read on to look at the Mag 7’s recent earnings reports… and at how the upcoming election could throw a wrench into their machinery going forward.

87% Chance of a Kamala Win? Here’s How to Prepare… 

The real story that �������°� is preparing for is not what happens on Election Day; it’s what could be coming the day after. That’s when unprecedented social strife could be unleashed – including a bout of massive stock market volatility. Fortunately, there’s a way you can not only avoid big potential losses… but also profit… as the most chaotic chapter of the election plays out. Click here to learn more.

Regards,

�������°�, Smart Money

The post This Bias Could Be Affecting Your Portfolio appeared first on InvestorPlace.

Two years ago, in a seminal moment for the industry, tech startup OpenAI launched its next-gen chatbot, ChatGPT. That was, after all, the moment that many consider the dawn of the Age of AI. 

But that splashy debut may well have just been OpenAI getting its feet wet.

Now it appears the company is preparing for its ‘second act.’ We think it could be far bigger than its first. And it may even lead OpenAI to become the most important and powerful company in the world. 

That’s because the firm is quickly gaining ground when it comes to artificial general intelligence (AGI), widely considered the endgame for AI development. 

AGI is the top tier of the AI pyramid. As McKinsey & Company explains, it will be able to “replicate human-like cognitive abilities including reasoning, problem solving, perception, learning, and language comprehension.”

“AGI tools could feature cognitive and emotional abilities (like empathy) indistinguishable from those of a human. Depending on your definition of AGI, they might even be capable of consciously grasping the meaning behind what they’re doing.”

Clearly, when this AI breakthrough is achieved, it will be an incredibly big deal, likely reshaping every facet of our daily lives.

And right now, OpenAI is making leaps and bounds toward this near-fantastical future.

Paving the Path to the AI Endgame

The company recently launched a landmark new AI model – ChatGPT o1 – capable of complex reasoning. 

Of course, there are a lot of AI models out there right now. But in terms of structure, intelligence, and capabilities, most are extremely similar. These models – like ChatGPT 4, Gemini, Claude, and Grok – are mostly just chatbots capable of conversational language and not much else. 

These bots can engage in dialogues, answer questions, and perform tasks. But for the most part, their responses are based on pre-programmed scripts and/or simple pattern matching. 

In other words, they aren’t really ‘thinking.’ 

But ChatGPT o1 reportedly thinks. 

It goes beyond simple pattern recognition. ChatGPT o1 can engage in logical thinking, make inferences, understand cause-and-effect relationships, and solve problems by applying principles or rules learned during training. As such, it can go beyond just helping us automate tasks and, instead, help us to solve hard problems. 

In fact, in its introduction of this new model, OpenAI claimed, “o1 can be used by healthcare researchers to annotate cell sequencing data, by physicists to generate complicated mathematical formulas needed for quantum optics, and by developers in all fields to build and execute multi-step workflows.”

This is a massive achievement in AI development. And the results appear stunning. 

Each week, the TrackingAI project provides IQ quizzes to a variety of AI models. Most models out there right now – like ChatGPT 4, Llama 3.1, Claude, Grok, and Bing Copilot – score around 80 to 90 on those IQ tests. 

The average human IQ is around 100. Therefore, current AI models are slightly less ‘intelligent’ than the average human. 

But ChatGPT o1 scored a 124 on TrackingAI’s IQ test.

That is almost 50% better than most other AI models. And it is just below the threshold for genius – an IQ above 130 – which is reserved for just 2% of the human population. 

In other words, ChatGPT o1’s complex reasoning breakthrough looks like a leapfrog forward in AI development. 

The Final Word

This groundbreaking development puts OpenAI one massive step closer to achieving AGI. 

Maybe that’s why the company is currently looking to raise billions of dollars at a lofty valuation of $150 billion – and why so many are rushing to participate in that funding round… 

Indeed, Microsoft is reportedly looking to invest. So is Apple. And Nvidia, too. 

When was the last time that Microsoft, Apple, and Nvidia all invested in the same startup? That’s not a rhetorical question; I don’t know the answer for sure. But I think this may be the very first time. 

In fact, we posed this same question to ChatGPT. (And, of course, take its response with a grain of salt.) But it seems the bot can corroborate this.

Perhaps these companies see the writing on the wall – that ChatGPT o1 puts OpenAI at the front of the pack when it comes to achieving AGI. 

And, believe it or not, we think OpenAI’s potential ascent toward ‘AGI creator’ will create huge tailwinds for Apple. 

Find out why – and how to profit from it.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post OpenAI Races Toward AGI with its New Breakthrough Model appeared first on InvestorPlace.

This Week’s Ratings Changes:

Upgraded: Buy to Strong Buy

Downgraded: Strong Buy to Buy

Upgraded: Hold to Buy

Downgraded: Buy to Hold

Upgraded: Sell to Hold

Downgraded: Hold to Sell

Upgraded: Strong Sell to Sell

Downgraded: Sell to Strong Sell

To stay on top of my latest stock ratings, plug your holdings into Stock Grader, my proprietary stock screening tool. But, you must be a subscriber to one of my premium services. Or, if you are a member of one of my premium services, you can go here to get started.

Sincerely,

�������°�

The post Weekly Upgrades and Downgrades appeared first on InvestorPlace.

Just this year, Louis has closed out some big wins using quantitative analysis, including Rambus Inc. (RMBS), 133% in 17 months… Super Micro Computer Inc. (SMCI), 593% gain (1/3 sell)… Gatos Silver Inc. (GATO), 46% in one month… and e.l.f. Beauty Inc. (ELF), 69% in 16 months. So, I know that his approach to investing can yield extraordinary results. 

That’s why I hope you’ll hear what Louis has to say – in his recent “The Day-After Summit” broadcast – about the opportunity to profit in the potentially chaotic postelection weeks and months ahead. He has a proven track record stretching back decades in this type of investing… and Louis wants to make sure as many folks position themselves to profit as possible. 

To catch the reply of Louis’s preelection summit… and to find out more about his postelection strategy… here’s a link to watch his broadcast. And here’s Louis with more on all that… 

Hello, Reader.

Betting markets favor a Donald Trump win… 

The RealClearPolitics Betting Average tracks odds from sportsbooks and prediction markets. 

It’s a snapshot of how bettors are viewing the outcome of the election. 

And it gives Trump a 64% chance of winning the White House. 

That sounds about right. 

Despite what his detractors say, he’s now more popular than ever among voters. And recent polling shows him making gains nationally and in key swing states. 

But I’ve been a professional investor for more than 40 years. And I can’t ignore what stock market history says about the prospect of a shock win for Kamala Harris. 

This from Kiplinger… 

In the 23 presidential elections since 1928, 14 were preceded by [stock market] gains in the three months prior. In 12 of those 14 instances, the incumbent (or the incumbent party) won the White House. In eight of nine elections preceded by three months of stock market losses, incumbents were sent packing. 

That’s an 87% accuracy rate. 

The benchmark U.S. stock market index, the S&P 500, is up about 7% since the start of July. The Dow Jones Industrial Average and the Nasdaq Composite are also showing gains over that time. 

If history is any guide, Harris, not Trump, is likely to be the next president of the United States. 

And that’s not the only indicator pointing to a Harris win. 

Since 1932, the incumbent party has always won reelection unless a recession occurred during the current term (in this case, President Joe Biden’s term). 

And right now, no matter how folks may be feeling about the U.S. economy, it’s not in recession. 

Data released yesterday shows the economy grew at an annualized rate of 2.8% in the recent quarter. That’s less than forecast… but it’s nowhere near recession levels. 

But as I told the more than 5,500 folks who joined me for my free-to-view “The Day-After Summit” Tuesday night, the real story I’m preparing for is not what happens on Election Day. 

It’s what could be coming the day after – next Wednesday, November 6. 

It doesn’t matter who you’re voting for. That’s when unprecedented social strife could be unleashed as both sides contest the election. 

It could also set off a chain reaction on Wall Street – including a bout of massive stock market volatility. 

This could be the most bitterly fought postelection battle in modern U.S. history – worse than Gore v. Bush in 2000 and Trump v. Biden in 2020. 

Now, the best thing we can hope for is a clear winner on November 6. But I wouldn’t be surprised if we still didn’t have a clear winner come Inauguration Day, on January 20, 2025. 

Fortunately, there’s a way you can not only avoid big potential losses… but also profit… as the most chaotic chapter of the election plays out. 

First, it’s important you understand that this isn’t my first big election call. 

“Age of Chaos” Is Entering Warp Speed 

Back in December 2023, I made a presentation about the “Californication” of America. 

I warned that Biden would drop out of the presidential race and be replaced by a California Democrat who would spread the state’s ultra-liberal policies across America. 

(I predicted that candidate would be California Governor Gavin Newsom, not former California Attorney General Kamala Harris. But we indeed ended up with a liberal California Democrat instead of Biden.) 

I also warned that we were entering an “Age of Chaos” – a time of unprecedented chaos and danger for Americans. 

That presentation has now been viewed more than 3.2 million times. Folks who tuned in heard the steps I’ve recommended taking to prepare. 

But none of that compares to the volatility that could happen next week, as the Age of Chaos enters warp speed. 

You see, this isn’t just about the votes we cast for president. 

On November 7, the 12 members of the Federal Open Market Committee (FOMC) will meet behind closed doors at the Federal Reserve Board Building in Washington, D.C., to vote on their policy for key interest rates. 

Right now, markets are expecting a quarter-point cut to follow the half-point cut we got in September. But it could be another half-point cut. Or the Fed could decide to leave rates where they are. 

That’s three more market-moving variables that will compound uncertainty after the election. 

In normal times, Fed decisions are big market drivers. But this is coming right after perhaps the most contentious presidential election in modern history. The entire country will be on edge. 

That could lead to even more severe stock market volatility as these two shocks hit our political and financial systems at once. Stocks could whipsaw violently as investors try to cope with all the uncertainty. 

And from what I’m hearing, investors are already getting nervous… 

Earlier this week, a colleague said she recently called her broker for a routine question about her IRA. He immediately asked, “Are you calling me to move your money out of the markets?” 

He went on to say he’d had a deluge of such calls over recent days due to fears of election chaos. 

You may be worried about your own nest egg. 

And that’s only natural. We’re humans, after all. And as humans, we tend to crowdsource our decision-making, especially when we’re facing fear and uncertainty. 

That’s as true today as it was 200,000 years ago. 

Don’t Let Crowd Behavior Kill Your Portfolio 

Imagine you and your hunter-gatherer tribe are moving to a place with more fresh water. 

On your way, you spot dozens of terrified members of another tribe running for their lives with terrified looks in their eyes. It’s a human stampede. 

Your instincts will tell you to run like the wind along with them. It doesn’t matter if you can’t see a saber-toothed tiger or a rival tribe brandishing their spears. You just know it’s time to run. 

This crowd instinct is one of the reasons we survived in the wild and became the dominant species on Earth. 

But the urge to join a stampeding crowd can kill your stock portfolio. 

The human brain is a marvelous tool for creating art, music, language, and feats of engineering. It’s a terrible tool for investing. 

That’s why, during my “Day-After Summit” Tuesday night, I laid out an alternative approach to navigating the postelection chaos. 

It has nothing to do with following your instincts… or with human emotions. 

Instead, it’s a quantitative system I consider to be the No. 1 tool for anyone looking to turn uncertain macroeconomic, financial, or political events into outsized stock market gains. 

In backtests, it’s identified 3,500 stocks that have gone on to soar 1,000% or higher. 

And the greater the volatility, the greater the potential gains. 

That volatility could be from a bitterly contested election. It could also be from any number of shocks that hit the market as the Age of Chaos plays out. 

Whether it’s a currency shock… 

Another supply-chain issue… 

A new law within the next president’s first 100 days in office… 

A new war breaking out… 

Or a powerful new technology transforming the world… 

If a shock event causes volatility to flare up, this system shows you how to trade it for gains. 

You can get full details of how it works, and how you can use it to position yourself to profit ahead of Election Day, by watching my broadcast here. 

To get you started, I’ve included details of one trade you can place right now that I believe will pay off… no matter who’s eventually declared the winner. 

And if targeting short-term gains using a quantitative system is not your thing, that’s fine, too. 

Just remember that the worst thing you can do when volatility kicks up is to panic-sell out of your long-term stock holdings. 

The point is, we could be in for a trying couple of months. But eventually, we’ll have a new president. And markets will return to a more stable footing. 

You just may need plenty of patience… and a strong stomach… to ride out the churn between now and then. 

Sincerely, 

�������°� 

Senior Quant Analyst, InvestorPlace

The post 87% Chance of a Kamala Win? Here’s How to Prepare…  appeared first on InvestorPlace.

Last week, I told you the story about news magnate Charles E. Marsh. The Ohio-born businessman had built an incredible fortune buying up small newspapers across Texas in the 1930s… but knew little about the oil boom happening under his nose. 

To invest in the bonanza, he bankrolled Sid Richardson, an expert oil wildcatter who had fallen on hard times during the 1920s oil bust. Marsh wrote a $30,000 check, and the oilman went to work. 

It was a resounding success. Within a year, Richardson had discovered the Keystone Field, a part of the massive Permian Basin that remains in production today. Both he and Marsh split the profits, built more wells, and cemented their legacy as one of the most successful teams in Texan oil history. 

I used the story to illustrate how investing alongside experts can work stunningly well. Marsh’s profit from his oil ventures is unknown, but one of his foundations has distributed at least $700 million since 1947 and is still worth $620 million. And Richardson eventually passed away in 1959 with an estimated net worth of $200 million, turning his children into eventual billionaires. 

This type of “coattail” investing continues to work today. Every $1,000 invested in Warren Buffett’s Berkshire Hathaway Inc. (BRK-A) at its IPO would now be worth over $2.3 million today. And one of �������°�’s top Berkshire-style picks has risen 42% in the past year alone (subscription required). 

That’s why I was excited to invite you to a presentation last week by InvestorPlace Senior Analyst �������°�. In the talk, he unveiled a quantitative tool that helps investors identify stocks with just the right amount of institutional buying behind them – not too much, and not too little. According to back-testing, the system – known as MoneyFlow – has outperformed the market by a 6-to-1 ratio since 1990. 

I also shared three of the system’s top picks with you. 

If you missed out on the event, it’s still not too late to watch a replay. And in the meantime, I’ve been given permission to share another three top MoneyFlow stocks with you this week. 

The Hidden AI Gem 

In 2023, Meta Platforms Inc. (META) quietly launched its latest generation of smart glasses. These spectacles look surprisingly ordinary – at first glance they’re virtually indistinguishable from the ordinary Ray-Bans they’re modeled after. The only giveaways are small camera on the frame that captures what the user is seeing and a pair of built-in speakers to give Meta AI’s voice assistant a way to communicate. 

Reviewers have noted these glasses have improved significantly in recent months. Users can now get near-instant responses to queries (i.e., why does my lawn look that way?), and the Meta glasses have become a surprise hit among vision-impaired users. Blind people can ask the glasses what they’re looking at and get an AI-generated response in under two seconds. 

Much of this magic is made possible by better AI. Meta Platforms has been pouring resources into improving their flagship large language model, LLaMa 3, and has become one of the Top 5 U.S. spenders on AI infrastructure. 

But the other half of the success is thanks to companies like Ericsson (ERIC), a Swedish firm that dominates 5G network equipment. Meta still relies on offsite AI data centers to do heavy lifting, so lightning-fast connections across mobile devices is essential. Ericsson provides the hardware (antennas, cables, microwave technologies, etc.) and the software that connects everything together. 

That’s helped Ericsson notch some of its best quarters yet. On October 15, the firm announced Q3 earnings that knocked expectations out of the park. North American wireless network revenues grew 75%, reaching some of their 2022 cyclical peaks. Net income flipped back positive. 

The MoneyFlow system sees even greater gains ahead. The quantitative system awards Ericsson an 85 out of 100 – a figure on the upper cusp of being overbought, but not quite yet. 

The fundamental picture backs this up. The global 5G industry is recovering from a cyclical downturn in 2023, and companies like Ericsson are on the forefront of this uptick. Louis’s Stock Grader system awards Ericsson an “A” for its upward earnings estimates and improving cash flow. In addition, the increased demands from mobile AI devices will keep telecom companies investing in 5G upgrades (and 6G down the road).  

A Potential AI Winner 

Meta Platforms Inc. (META) itself is also a high scorer in the MoneyFlow system. The company scores a 79 – right in the center of the “sweet spot” of insider buying. 

There are good reasons to suspect more gains to come. This week, Meta reported fiscal 3Q earnings that blew expectations out of the water. Advertising revenues surged 19%, driven by an 11% increase in advertising prices and solid improvements in customer usage. Presidential election years are a historically excellent period for advertising firms, and Meta has become a key beneficiary. 

That means shares of the social media firm continue to have upside, despite rising 50% in recent months. Earnings have grown so quickly that Meta’s stock continues to trade at historically average price-to-earnings (P/E) ratios. High usage figures are also keeping earnings estimates through 2027 elevated. 

Best of all, markets seem to be completely ignoring Meta’s efforts in AI. As I noted earlier, the company is building a world-class system of AI-focused data centers; they could theoretically someday offer excess computing power to outsiders for a fee. Companies like Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT) made similar pivots when they began offering cloud computing. 

The social media firm also remains at the forefront of large language model development, with its flagship LLaMa 3 widely considered the fastest foundation model in the world. (It’s easy to forget that Meta’s AI team is run by one of the three “godfathers” of AI, Yann LeCun.) Its augmented reality and virtual reality (AR/VR) products also remain world class. 

That means investors buying Meta’s stock are essentially paying for a lucrative advertising firm with a “free” AI option on top. The social media firm is positioning itself to become the AI device in our living rooms (and the spectacles on our face), and markets continue to assign no value to that potential upside. 

Fast Fashion 

Fashion companies are notoriously difficult to buy. Fads come and go, and what’s hot this season is often uncool the next. Shares of Crocs Inc. (CROCS), for instance, saw a 1,000% surge during the Covid-19 pandemic before return-to-work policies sent shares plummeting 75%. Apparel firms from Gap to Guess? have seen equally large swings. 

The one exception to this is athletic shoes, which has been dominated by a handful of companies for the past four decades. Consumers are far more “sticky” in their preference for sporting footwear, and companies from Nike Inc. (NKE) to Adidas AG (ADDYY) have benefited from their loyal customer bases. 

Now, Deckers Outdoor Corp. (DECK) appears to be profiting from the same forces.  

The owner of the Hoka brand has been carving out a niche in comfort-oriented running shoes. HOKAs are known for their thick, cushioned soles, and casual runners have flocked to the brand. Last week, Deckers announced in its fiscal Q2 earnings report that Hoka sales had risen 35% to $570.9 million, helping shares of the parent company reach record highs. Deckers also has seen success in its UGG brand of comfort footwear – a segment we see as less fashion-oriented. 

The MoneyFlow system believes more gains are on the horizon. Institutional investors have been accumulating shares, putting Deckers in the “sweet spot” with a score of 76.5. Wall Street also has been upping estimates thanks to the company’s strong quarterly earnings; the average analyst has raised fiscal 2026 earnings estimate by almost 20%. 

However, please note that Deckers should remain a shorter-term play. The company has seen significant revenue declines in its Sanuk-branded flip-flops, and stagnation of its Teva brand, telling us that the firm lacks a “magic formula” to make any particular brand succeed. (i.e., they could have simply gotten lucky with Hoka and UGG). Shares are also relatively expensive, creating the potential for downside and reducing the possibility of a takeover offer. Though Deckers should do well for the next three to six months, investors will want to be sure to sell once the company’s MoneyFlow score begins to wane. 

The Day After Summit  

The 2024 election has created a frenzy among gamblers. Over the past several weeks, Americans have bet at least $100 million on the election (despite its gray-area legality), and one French national alone has put $45 million bet on a Donald Trump victory. So much money and attention has been focused on predictive markets that some even believe they could sway the election itself.  

However, we remain unconvinced of the wisdom of such wagers. High-quality polls-of-polls continue to show the race in a dead heat, so winning the election trade will come down to luck, not skill. Besides, current election betting markets makes it a zero-sum game (or a negative one once you consider the house cut). 

The same is true of stock markets. Millions of dollars have traded hands on “Trump Trades” like Trump Media & Technology Group Corp (DJT) and “Harris Trades” like risky clean energy stocks. Options market makers are having a field day selling high-priced derivatives. 

That’s why we believe that using systems to invest is a far superior strategy, especially in times of rising volatility. 

In his “Day-After Summit,” Louis shows folks how to use MoneyFlow to navigate the volatility he sees coming and turn it into profits by using the system. During that event, he has a lot to say about the period of extreme market chaos that’s coming. Millions of Americans risk getting into trouble as markets whipsaw… and he doesn’t want you to be one of them.  

And in addition to showing you the best way to navigate the chaos, Louis shares a postelection trade – for free – with everyone who attends. It’s designed to pay off no matter who wins the election.  

Here’s that link again to watch a replay. 

I’ll see you back here next Sunday.  

Regards,  

Thomas Yeung  

Markets Analyst, InvestorPlace

Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.

The post 3 More Stocks to Buy Before the Election Chaos appeared first on InvestorPlace.

“The Magnificent Seven” are not superheroes, though that’s what the name sounds like. (And maybe how some investors view them.)

They are a group of the most influential companies in the U.S. stock market, particularly high performing stocks in the tech sector. And in the past couple years, they’ve set their sights on artificial intelligence.

At the start of the year, in the January issue of Fry’s Investment Report (members can log in here), I predicted how the Mag 7 would perform throughout 2024…

I expect this downtrend [of 2023 performance] to continue as the richly valued Mag 7 stocks lose some of their luster. To be clear, I don’t expect these stocks to perform poorly this year, just less well than the overall market.

The Mag 7 stocks led the first phase of what will likely be a multiyear AI-focused rally. But now that Phase II of this rally is underway, I expect the Mag 7 stocks to hand off the baton to a variety of smaller, dynamic AI plays.

Now that we’ve reached the final quarter of the year, I can report that my early-year prediction was mostly correct… but not entirely so.

Stock-market darling, Nvidia Corp. (NVDA) has rocketed 174% so far this year, which easily trounces the 21.6% return the S&P 500 Index has delivered year-to-date. However, the other six Mag 7 stocks have advanced only 18.9%, as a group.

In other words, the Mag 7, ex-Nvidia, have trailed the market. Admittedly, these stocks have not trailed the market by much, and they have continued to produce nice, double-digit returns. But as they ramp their spending on AI data centers and other capital-intensive projects, they will struggle to maintain their growth trajectories.

The upcoming election might also throw a wrench into the machinery.

So, let’s take a brief look at their recent earnings reports to see what they portend for the immediate future.

Let’s Talk Numbers

Tesla Inc. (TSLA) was the first Mag 7 stock to report its earnings on October 22.

Tesla surprised the market for the third quarter of 2024, reporting earnings of $0.72 per share (up from $0.53 last year) and nearly $25.2 billion in revenue. The company beat earnings expectations by 20% while slightly missing revenue projections, marking continued growth from the previous quarters.

However, I’ve turned bearish on the EV sector since the middle of this year. EV-related stocks have suffered from considerable sector-specific negatives, notably the sudden worldwide slowdown in EV sales growth.

Alphabet Inc. (GOOGL) reported its third-quarter earnings on Wednesday. The tech giant reported $2.12 earnings per share and $88.27 billion in revenue, representing significant growth of 37% and 15%, respectively. Alphabet surpassed expectations, with Google CEO Sundar Pichai highlighting the company’s cloud and AI success.

Meta Platforms Inc. (META) also announced third-quarter earnings on Wednesday. Even though the company reported the lowest year-over-year growth since the second quarter 2023, it still delivered $6.03 earnings per share and $40.59 billion in revenue. CEO Mark Zuckerberg emphasized significant AI investments, including substantial spending on Nvidia GPUs, while noting potential challenges with user numbers and anticipated infrastructure expenses for 2025. All of which led to a slight dip in after-hours trading.

Microsoft Inc. (MSFT) posted strong quarterly results on Wednesday with $65.59 billion in revenue and $3.30 earnings per share, representing a 16% year-over-year revenue increase.

However, the tech titan reported challenges with data center infrastructure deliveries, with outside suppliers running late and potentially impacting the ability to meet demand in the fiscal second quarter. Microsoft’s recent investment in the Three Mile Island nuclear power plant underscores its ongoing efforts to support a new phase of AI infrastructure.

Amazon.com Inc. (AMZN) reported its third-quarter earnings on Thursday, delivering $158.88 billion in revenue and $1.43 earnings per share. While Amazon Web Services (AWS) revenue fell slightly below market expectations, the division continues to show growth compared to the previous year. The company significantly ramped up its investments, with spending spiking 81% year-over-year from $12.48 billion to $22.62 billion, primarily focused on expanding data center capabilities and investing in Nvidia’s GPUs to back its ongoing AI infrastructure plans.

Also on Thursday, Apple Inc. (AAPL) announced quarterly earnings of $94.93 billion in revenue and $1.64 earnings per share. While beating Wall Street expectations there, the company’s net income took a hit from a one-time European tax decision.

iPhone sales surged 6%, with CEO Tim Cook stating that iPhone 15 sales were “stronger than 14 in the year-ago quarter, and 16 was stronger than 15.” With the new iOS 18 update, the iPhone 16 continues Apple’s AI efforts with “Apple Intelligence,” which includes Writing Tools among its suite of AI-powered features.

Prepare for the Months Ahead

Don’t get me wrong, the Magnificent Seven are magnificent for a reason. They’re world beaters, global leaders, and technology leaders.

But even magnificent companies can underperform, which is true in this case. So, it’s safe to say my early-year prediction was mostly true.

This underperformance is primarily due to high valuations, the wax wings of the stock market. And this is a trend I expect to continue for the Mag 7 in 2025. As the market continues to fan out into lower-valued companies, these giants are beginning to experience a dip in numbers, meaning a deep correction could very well be in the cards.

We are entering a new frontier in artificial intelligence, where the baton is being passed between companies, promising to reshape our day-to-day lives.

I don’t expect a dramatic downfall yet, but volatility is to be expected with any transition. And the upcoming presidential election cycle adds another layer of market uncertainty.

Both candidates, Donald Trump and Kamala Harris, aren’t fond of talking about AI. Though Trump continues to cozy up to Elon Musk, and Harris aligns more with Sam Altman’s belief in ethical innovations, what they’re not saying could be the most telling signal for investors…

That’s why my colleague �������°� is urging investors to prepare for the market’s seismic shift in the days after the election. AI stocks have the potential to be at the epicenter of this transformation, with ripple effects across multiple sectors.

Louis believes November 6 – the day after the election – could trigger chaos in the markets, and change the game of investing for months, whipsawing the stocks most investors have in their portfolios.

Fortunately, Louis has a quantitative tool that’s made to help you through this uncertainty. And folks who take advantage of this system will have the chance to get ahead of unpredictable market moves during political, economic, and financial shocks, giving you the shot at rare short-term gains.

Louis introduced this tool at this “Day After Summit” earlier this week.

To watch his special presentation about what to expect after the election – and how to prepare before it’s too late – click here.

Regards,

�������°�

The post The Magnificent Seven’s Fate After Election Day appeared first on InvestorPlace.

Since 2014, the Chapman University Survey of American Fears has asked more than 1,000 people across the country about 85 fears covering a wide range of categories, from crime to natural disasters to ghosts, spiders, and public speaking.

According to results released this month, a little more than 65% of respondents cited corrupt government officials as a top fear.

I’ve felt real fear before.

Many years ago, I was a passenger in a car speeding down the highway at about 70 miles an hour when one of the rear tires came off.

I was half-asleep when it happened. I remember feeling the thud as part of the car suddenly dropped from under us.

We spun several times and finally ended up facing the wrong way on the interstate, braced against a barrier that separated the lanes from traffic headed in the opposite direction.

Afterward, my heart was pounding, and I had trouble getting out of the car—not from any injuries but because my legs felt like noodles.

We all came out of the accident okay, but driving on the same stretch of highway again always raised my heart rate as the memories came back.

Fear of corrupt government officials isn’t the same type of fear from a car accident, but both are real

The Chapman survey also reveals what you might expect: political fears have intensified.

More than half of Americans (51.6%) fear the outcome of the November election while 48.6% are worried about potential civil unrest following the results. 

“The fear of government corruption has consistently been one of the top fears expressed by Americans,” said Steve Pfaff, Ph.D., professor of sociology. “What that tells us is there is a profound mistrust; that American citizens are worried about their government and afraid that powerful or resourceful interests may have undue influence over the government.”

As we approach election day next Tuesday, both sides are already making accusations of cheating and corrupt government officials trying to rig the election.

Tensions are running high, and the country is as divided as it has been in modern times.

But you can’t let fear make decisions for you … and especially not about your money.

Fear and investing

Of course, the market has its own metric for measuring investor fear, the Volatility Index (VIX).

Put simply, it’s a measure of volatility in the markets. When the VIX moves higher, traders are more uncertain about the market.

Investing legend �������°� is expecting escalating volatility in all sorts of asset classes and prices in the days immediately surrounding the election.

Remember, last December Louis made a big prediction about the presidential election – that Joe Biden would not be the Democratic nominee.

That was a bold prediction at the time, but it turned out to be true.

Now, Louis is predicting we will see a lot of fear and volatility in the week to come.

In a presentation about election-related fear and market volatility, Louis explained his prediction alongside Charles Sizemore, Chief Investment Officer at The Freeport Society.

If you’re new to the Digest, The Freeport Society is an alliance of free thinkers and truth sayers.

This group believes that free minds, free speech, free enterprise, and free markets made America the greatest country in history. They advocate for a return to those ideals.

In the Freeport Alpha service, Charles helps members generate alpha – marketing beating returns – through a systematic approach to investing.

Last week, in a presentation hosted by Louis, Charles shared his perspective on what could be coming in the days around the election, and what it could mean for investors.

Volatility has come back with a vengeance…

And it’s starting to surge right now leading into Election Day…

But if we’re right, the biggest spike of all will come the day after the election…

I believe next week… we could see the VIX double, triple or even worse. 

I mean, from July to August of this year, we saw volatility triple on far less than the election shock we’re predicting here…

And what’s volatility, really?

It’s just a lot of unexpected, chaotic events, whipsawing investors.

Big moves up and down in the marketplace.

It’s basically uncertainty about the future.

And most investors get fearful and make dumb decisions when there’s fear and uncertainty in the market.

That’s why Louis and Charles are preparing to make profit from what’s coming.

During the The Day After Summit, they explained it all.

From how to put election volatility on your side… to why the purchasing power of the dollar is in danger regardless of who wins… to whether “this time is different” for heightened emotions surrounding the election…

Louis believes most investors aren’t ready for what’s coming.

Here’s Louis:

Most folks are simply preparing for a repeat of the contested election results of 2020. The truth is unlike anything you’re prepared for…

In the early hours of November 6th — the day after the election — we’re predicting that uncertainty and political strife will begin… 

The day AFTER the election will be a critical date that could cause stock market chaos for everyday investors.

At The Day After Summit, Louis and Charles talk about how everyone in the markets should prepare.

You can click here to see a free recording of The Day After Summit.

More Americans are feeling real fear about the direction of the country – the Chapman survey makes that clear.

Given what’s coming next week, you owe it yourself to be prepared.

Enjoy your weekend,

Luis Hernandez

Editor in Chief, InvestorPlace

The post How Election Fears Can Drive Investing Decisions appeared first on InvestorPlace.

The main culprit was the earnings results from a couple of “Magnificent Seven” companies that investors were laser-focused on this earnings season: Meta Platforms, Inc. (META) and Microsoft Corporation (MSFT). Their results sparked concerns over their aggressive increase in AI spending. (You can read my full review of those earnings here.)

So, the question for investors now is who is the true king of “The Magnificent Seven”?

NVIDIA Corporation (NVDA) is, of course, the red-hot company right now. With a market cap of $3.3 trillion, it’s the second-largest company in the S&P 500. Only Apple Inc. (AAPL) edges NVDA out for the top spot.

We’ll learn more from NVIDIA on November 21, when the company announces its results. But for now, it was Apple’s and Amazon.com, Inc.’s (AMZN) turn to release their earnings this week.

Investors have been eager to see whether Apple’s entry into the AI race will bear any fruit. And given the concerns about AI spending, investors were curious to see whether Amazon is bucking the trend. 

So, in today’s Market 360, I’ll review the latest earnings from Apple and Amazon. We’ll examine whether investors got what they were hoping for, and I’ll also share whether my Stock Grader system says they’re good buys right now. Then, I’ll share where you can learn about my latest election prediction which could shock you.

Amazon: It’s All �������°� the Cloud…

For its third quarter, Amazon reported results that blew expectations out of the water. The company reported $1.43 earnings per share on $158.9 billion in revenue. Analysts were expecting earnings per share of $1.16 on $157.29 billion in revenue, so Amazon posted an impressive 23% earnings surprise.

Now, Amazon Web Services (AWS) is Amazon’s cloud computing unit, and Wall Street closely tracks it because it has been a huge driver of both sales and profit for the company. For the quarter, AWS raked in $27.45 billion in revenue which was about in line with Wall Street expectations. In other words, Amazon remains more dominant than ever in cloud computing.

The company recently launched new AI-powered features, including Rufus, a generative AI-powered shopping assistant, which is available in parts of Europe. Then, there’s Project Amelia, an AI assistant that helps sellers with tailored business insights.

During Amazon’s earnings call on Thursday evening, CEO Andy Jassy explained that Amazon expects to spend more than $75 billion in 2024, and even more next year. And this is all due to, you guessed it, the demand for generative AI and the data centers needed to fuel it. Here’s what he had to say:

The faster we grow demand, the faster we have to invest capital in data centers and networking gear and hardware. And of course, in the hardware of AI, the accelerators or the chips are more expensive than the CPU hardware. And so we invest in all that up front, in advance of when we can monetize it with customers using the resources.

Now, I want to highlight one key thing about Amazon, which is that it seems to be benefitting from its AI investments already. Unlike Microsoft, which said it expects slower growth in its cloud business, Andy Jassy said that the AI business within AWS has generated several billion in sales already and that it is growing at a triple-digit rate. And this is why Amazon’s shares went up by about 6% on Friday following the earnings beat.

Apple Shines Despite Bumps in the Road

Apple also beat Wall Street’s expectations but was hit hard by a large tax payment to the European Union (EU). For its fourth quarter, Apple reported $1.64 earnings per share on revenue of $94.9 billion in revenue. Analysts were expecting $1.60 earnings per share on $94.58 billion in revenue.

There was just one problem. Apple had to make a hefty one-time payment of $10.2 billion in back taxes to Ireland after the European Court of Justice ruled that Apple benefited from Ireland’s tax loopholes.

Despite this charge, Apple is seeing strong growth in iPhone sales, which account for 49% of the company’s overall sales. iPhone revenue reached $46.2 billion, which is a 6% growth from the same quarter last year. In the Greater China region, however, revenue was down year-over-year to $15.03 billion – and this disappointed some investors.

In my opinion, CEO Tim Cook is growing weary of China’s troubles weighing on Apple’s bottom line. And this is one reason why the company is pivoting its focus to India.

I should also add that the new Apple Intelligence features became available in the U.S. for iPhone, iPad and iMac users earlier this week. CEO Tim Cook says it “marks the beginning of a new chapter for Apple innovation.”

However, like all the Magnificent Seven stocks, investors want to see that the company’s AI spending is going to lead to growing revenue and profits soon.  

Apple did project company revenue to grow “low- to mid-single digits” year-over-year next quarter. And that disappointed Wall Street, sending Apple’s stock down about 1.3% yesterday.

So, Are Amazon and Apple Buys?

Clearly, investors were pleased with Amazon’s results. And while investors were not as happy with Apple’s earnings, I think Apple is doing a much better job monetizing AI right now than, say, Microsoft.  

Of course, this may already be baked into the cake, considering the $300 billion disparity between Apple and Microsoft’s market caps. However, it’s important to remember that the AI race is a marathon and not a sprint. And since Apple typically enters the fray late and comes from behind, I wouldn’t count the company out.

But the proof is in the pudding, as they say. So, let’s see what my Stock Grader (subscription required) has to say…

Apple gets a C-rating for both the Fundamental and Quantitative Grades. It also has a Total Grade of “C”, which signifies a “Hold.” In other words, if you’re looking to buy, you may want to hold off until the fundamentals and buying pressure improve. But if you own it, I wouldn’t sell it just yet.

Amazon, meanwhile, has stronger fundamentals, marked by the Fundamental Grade of “B.” However, buying pressure has dried up a bit, which is why it has a Quantitative Grade of “D.”

The Quantitative Grade makes up 70% of the Total Grade, so the end result is a Total Grade of “C” for Amazon. So, it’s not a buy just yet, either.

My Latest Market Prediction – How to Prepare

This upcoming Tuesday, November 5, everyone will be making their way to the polls to cast their ballot for the next President of the United States.

But the real story is what could happen the day after the election, on November 6.

In short, I’m talking about the potential for political strife to cause the markets to shift at an unparalleled, chaotic rate.

Now, you’re probably thinking that you should move your money around, right?

Before you do, I want you to know that in my four decades of experience in the market, I can tell you that times of chaos are often the best opportunities for life-changing profits.

So, in order to show you how to best prepare for the potential volatility that may be coming, Charles and I put together an urgent briefing called “The Day After Summit.”

We’ll tell you everything you need to know about what’s coming – and more importantly, how to profit.

Also, be sure to stick around to the end, because Charles will even reveal a free ticker that has shown an average gain of 31% in just over one month during situations like this.

You don’t want to miss it.

Click here to watch the replay of “The Day After Summit” now.

Sincerely,

�������°�

Editor, Market360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Microsoft Corporation (MSFT) and NVIDIA Corporation (NVDA)

The post The Latest Magnificent Seven Stocks to Report Earnings – Are They Buys? appeared first on InvestorPlace.

The U.S. economy added just 12,000 jobs last month, versus expectations for 100,000 new jobs and far below the September total of 254,000 new jobs.

Meanwhile, the August and September job growth numbers were revised lower by 112,000, and the unemployment rate pushed higher from about 4.05% to 4.15%.

Across the board, it was a very weak employment report.

Yet, the stock market powered higher today to kickstart November on a positive note.

Why?

Because yesterday’s weak jobs report was exactly what the stock market needed to push higher into the end of the year.

What’s more, companies like Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOGL), and Meta (META) delivered good numbers the other night that broadly topped estimates and confirmed both the resilience of the U.S. economy and strength of the AI Boom.

Despite the October Jobs Report missing estimates by a mile, we liked what we saw out of the market today and remain very confident in the prospects for a post-election rally in stocks.

As we’ve been saying for weeks, the fundamental earnings trends underlying the stock market are very positive and highly supportive of continued stock market strength. But those positive fundamental earnings trends have been held back spiking Treasury yields.

Today’s weak jobs report suggests to us that those spiking Treasury yields won’t spike for much longer. We expect the economic data to soften in the coming weeks. That softening – coupled with an election outcome – should push Treasury yields lower. Once those yields move lower, strong earnings trends will push stocks sustainably higher into the end of the year.

Let’s just be patient into the election. Then, after Tuesday, let’s see where yields go…

Getting the Economy We Deserve

Right now, the stock market needs “Goldilocks” economic data – data that isn’t hot enough to re-stimulate inflation, but also data that isn’t cold enough to plunge us into a recession.

Goldilocks economic data will ensure that inflation stays low, which will allow the Fed to keep cutting interest rates, which should re-stimulate the economy and help stocks push higher.

Recently, though, we’ve been getting economic data that was “too hot.”

Take the September jobs report, for example…

It was a blowout report that was much better than anyone expected. Ever since then, traders have pushed up their long-term inflation expectations and reduced rate-cut bets, which has resulted in the 10-year Treasury yield spiking from about 3.85% before the September jobs report to over 4.3% today.

But the October jobs report wasn’t “too hot.” It was just the right temperature.

Sure, the headline numbers missed expectations by a mile. But they were impacted by temporary factors like the Boeing (BA) strike and hurricanes.

Excluding those factors, the U.S. economy probably added more jobs than 12,000 last month. But, at the same time, those factors didn’t impact August or September, and those job numbers were revised lower by 112,000.

So, in the October jobs report, you had a little bit of good and a little bit of bad. It wasn’t too hot. It wasn’t too cold. It was just the right temperature.

And stocks responded with a strong rally.

The Final Word on the Jobs Report Rally

Overall, we are encouraged by today’s stock market rally and maintain confidence in our outlook for stocks to rally over the next few months on election certainty, strong earnings, and rising rate-cut hopes.

We still think things will be choppy and uneven until next Wednesday. And maybe for a few days after that, too, as the market processes results. But ultimately, once the election angst turns into resolution, this market looks primed to rally higher.

Especially AI stocks.

Let’s stay patient into next week…

We believe the October Jobs Report will mark the start of a big shift in the economic data from “too hot” back to “Goldilocks” levels.

If so, then the October Jobs Report could mark the start of a big holiday rally in the stock market.

We really like the setup for stocks in November and December.

And we especially like the setup for AI stocks in November and December, given the very positive things that companies like Amazon, Meta, Microsoft, and Alphabet had to say about AI this past week.

All up, we think good AI stocks are primed for some big gains over the next few months.

Click here to check out a few AI stocks we’re following closely in our research services.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Why the October Jobs Report Was so Bullish appeared first on InvestorPlace.

This morning, the latest payrolls report from the Labor Department showed our economy added just 12,000 jobs in October.

Hurricanes and the ongoing Boeing strike were behind much of the anemic figure. To put this into perspective, the number of jobs added in September was 223,000.

With irregular, nonrecurring disruptions playing a major role in today’s data, it’s hard to draw any meaningful conclusions about the overall health of our economy. This complicates the Fed’s job, as getting a bead on the true condition of the labor market is critical for setting interest rates.

Unfortunately, we’re likely in for another month of readings influenced by outside factors. Here’s The Wall Street Journal explaining:

With the data likely to show continued volatility from storms and strikes, the central bank’s challenge in the months ahead will be to tease out how well the labor market is doing.

Some job losses from Milton might not show up until the November jobs report comes out next month, for example, while people who go back to work after temporarily losing their jobs could push the numbers the other way.

Now, even though we need to take this report with a grain of salt, I want to point out one troubling aspect of it. All the job growth – every bit of it – came from the government. The private sector shrank.

Here’s MarketWatch:

The government created 40,000 new jobs in October, accounting for all of the increase. The private sector actually shed 28,000 jobs due to the Boeing strike and a pair of hurricanes.

In this morning’s Growth Investor Flash Alert, legendary investor �������°� highlighted another underwhelming detail – revisions:

The news gets even worse when you look at the details: August and September were revised down by a cumulative 112,000 jobs.

We’ve also now lost 46,000 manufacturing jobs – a lot of that from is from The Boeing Company’s (BA) ongoing struggles.

Additionally, the number of unemployed people has risen by 150,000 people. The unemployment rate remains unchanged at 4.1%, however, because the workforce is shrinking.

All in all, this payroll report is a statistical mess. It will probably need to be revised when we have more information.

We’ll keep you updated if/when those revisions come.

Let’s go straight to his recent update:

The real story I’m preparing for is not what happens on Election Day. It’s what could be coming the day after– next Wednesday, November 6.

It doesn’t matter who you’re voting for. That’s when unprecedented social strife could be unleashed as both sides contest the election.

It could also set off a chain reaction on Wall Street – including a bout of massive stock market volatility.

Louis writes that he wouldn’t be surprised if we didn’t have a clear winner even weeks after the election.

On Tuesday, The New York Times reported that more than 187 election-related lawsuits have already been filed. The Times writes, “Any open or pending litigation could prove grist for post-election rhetoric,” and “cases dismissed simply because the people who brought a case did not have standing to do so — rather than on the merits of their arguments — could still be used by those seeking to cast doubt on the process.”

And this is from Reuters on Wednesday:

With the U.S. election just days away, officials in the most competitive battleground states are bracing for misinformation, conspiracy theories, threats and possible violence…

Election officials say one of their biggest fears is a razor-close result where the outcome will hinge on court fights over small numbers of disputed ballots.

If Trump or Harris wins decisively we’ll see some immediate, exaggerated reaction as Wall Street adjusts to the new president’s agenda. But with the election uncertainty behind us, we’re likely to get back to some semblance of normalcy soon after.

However, a contested election would keep Wall Street guessing. And an uncertain Wall Street often becomes a volatile Wall Street.

But for traders, volatility presents an opportunity…

Earlier this week, Louis sat down with our geopolitical expert, Charles Sizemore from The Freeport Society to discuss the risk of election-based volatility in the market, and how they plan to trade it. During this “Day After Summit,” Louis laid out his gameplan for profiting from the post-election chaos:

It has nothing to do with following your instincts… or with human emotions.

Instead, it’s a quantitative system I consider to be the No. 1 tool for anyone looking to turn uncertain macroeconomic, financial, or political events into outsized stock market gains.

The greater the volatility, the greater the potential gains.

You can get the full details, as well as Louis’ and Charles’ thoughts on the election, by watching a free replay of the event right here.

Now, if you’re worried about the outcome of the election, resist the urge to allow that anxiety to drive your market decisions. If you own the stocks of great companies, Louis believes that staying calm in the next few weeks is the right call:

If targeting short-term gains using a quantitative system is not your thing, that’s fine. Just remember that the worst thing you can do when volatility kicks up is to panic sell out of your long-term stock holdings.

We could be in for a trying couple of months. But eventually, we’ll have a new president. And markets will return to a more stable footing.

I’m about to show you a chart that should make you uneasy.

What you’re going to see is the net percentage of mom-and-pop investors who believe stocks will be higher one year from now.

If you can’t read it, the subhead within the chart reads, “The general public has never been this confident in stock prices, June 1987 – October 2024.”

This should concern you because history shows that “the general public” tends to be excessively bullish or bearish at precisely the wrong time. This is one of the best contrarian indicators we have, screaming “watch out!”

We received another confirmation of this bullish sentiment yesterday when CNBC reported on research from Bank of America. The takeaway is that mutual fund cash levels are now the lowest ever. Or as the headline put it, “Investors all in on stocks.”

Meanwhile, what are corporate insiders doing with the stocks of the companies where they work?

Selling…a lot.

From Barron’s:

Corporate insiders are selling… shares of their companies at near-record rates…

Among all companies with any insider transactions so far in October, just 13% have experienced more insider buying than insider selling. That’s the lowest insider buy ratio in at least a decade, according to [InsiderSentiment.com] …

Insiders historically have been more right than wrong in the timing of their personal purchases of their companies’ shares.

[Professor Jon Seyhun from InsiderSentiment.com] has found from his research that the insider buy ratio has one of the best track records when forecasting the market’s 12-month return—superior to many better-known valuation indicators.

But it is “get your investment plan ready.”

To that end, here are a handful of questions to consider over the weekend:

• Which stocks do you plan on holding, regardless of volatility?
• Are you truly emotionally prepared to hold them if their prices plummet much further than you expect?
• Which stocks do you hold with less conviction that you’ll sell if they fall to a pre-established stop loss?
• What’s the specific stop-loss for each of those stocks?
• Do those stop-loss values reflect the intrinsic volatility of that stock so that you’re not selling prematurely, or holding too long? (By the way, if you want help with your stop-losses, click here to learn more about one of the best stop-loss tools in the industry)
• Which stocks are on your “buy list”?
• At which prices will you pull the trigger and add those stocks to your portfolio?

Remember, market volatility isn’t necessarily “bad.” Rather, it’s just a wealth-transfer mechanism.

It shifts wealth from emotional investors without a plan…to rational investors who have prepared for turbulence.

What you don’t want to do is follow the herd based on fear or greed. Back to Louis:

As humans, we tend to crowd-source our decision-making, especially when we’re facing fear and uncertainty.

But the urge to join a stampeding crowd can kill your stock portfolio.

The human brain is a marvelous tool for creating art, music, language, and feats of engineering. It’s a terrible tool for investing.

This is why Louis’ plan – for both election volatility and longer-term investing – is based on cold, impartial data, not emotions.

Bottom line: Don’t make the mistake of thinking you’ll be able to make wise decisions if/when stocks turn. The time to prepare is today, when your portfolio is likely setting new all-time highs.

Hopefully, you’ll never have to put that plan to work. But you’ll sleep better tonight knowing that it’s there if you need it.

Have a good evening,

Jeff Remsburg

The post The Payroll Report is a “Mess” appeared first on InvestorPlace.

That’s one reason why, earlier this week, I sat down with Freeport Society Chief Investment Strategist Charles Sizemore. His system is designed not only to shield your portfolio from volatility, but to leverage it for potential gains. In these unprecedented times, having a reliable guide through market chaos isn’t just helpful – it’s essential. To prepare yourself before it’s too late, you can check out my urgent “Day-After Summit” here.

Meanwhile, InvestorPlace CEO Brian Hunt wrote the book – literally – on the “Age of Chaos” we all find ourselves living through right now. And so I invited him today to talk more about how Tuesday’s election is only going to accelerate the Age of Chaos into hyperdrive.

Take it away, Brian.

“We’re entering an Age of Chaos…”

That was the call I made in my book that went out to select InvestorPlace subscribers back in September 2023.

In that book, I argued that the 2020s would be one of the most dangerous, exciting, chaotic, and opportunity-filled decades in U.S. history.

All thanks to several colossal megatrends slamming into the world simultaneously.

As we’ll look at today, those “Chaos Agents” are not slowing down. Instead, they’re entering warp speed.

In fact, we’re on a runaway train, speeding toward disaster. Prepare now, and you can save your wealth… even grow it. InvestorPlace quant genius �������°� and Freeport Society Chief Investment Strategist Charles Sizemore went into detail about how to do thisat their urgent “Day-After Summit” briefing, which you can access here.

Dollar Hedges Are Soaring

One of these Chaos Agents is something I call the Four D’s – Debt, Deficits, and Dollar Debasement.

Most major governments around the globe have promised too many things to too many people. They’re struggling under giant debt loads and unfunded liabilities.

These can’t possibly be paid with sound, honest money. They can be paid for only with ever increasing amounts of debased, diluted money.

This is producing major currency debasement and financial market chaos.

And with Donald Trump’s idea of doing away with the federal income tax and Kamala Harris’s idea to cut taxes for 100 million Americans, this situation is only going to get worse after November 5.

Just how bad is it in America?

Consider the latest figures from the government on tax inflows and spending outflows.

Interest on the national debt is $882 billion so far in 2024. National defense spending is $874 billion. That means we’re spending more on interest payments than we are on national defense. It’s insane.

Most voters and their political leaders have no interest in cutting spending, and so I stand by what I’ve said for years: All roads lead to more dollar debasement.

This is why gold, silver, and other dollar hedges are soaring.

And if I’m right about the Four D’s, they’ll go higher from here… probably much higher.

Charles’ paid-up Freeport Investor subscribers are positioned to profit.

He added a gold exchange-traded fund to the model portfolio when we launched The Freeport Investor just over a year ago.

Since then, it’s up 35%.

He also recommended Bitcoin as a hedge against a declining dollar. It’s up nearly 60% in the model portfolio.

Bitcoin is “digital gold” – a hard currency that can easily be transferred, stored, bought, and sold. It’s wealth storage and debasement defense for the exponential age.

And this chart is bullish on Bitcoin’s prospects from here.

This month, the cryptocurrency broke out of a descending channel (the blue lines).

Over the next six months, I expect it to break out past $75,000.

Exponential Progress Is Giving Life to AI

Another Agent of Chaos I talked about in my book is exponential technological progress.

After years of advancing at relatively modest rates, computers are now advancing at mind-blowing exponential rates.

Every year, computers get faster and more powerful. They also get cheaper and smaller.

This trend has massive implications for the economy. It makes it so our world is changing at ever increasing rates. It means new industries are being created at light speed… while demolishing old businesses at the same pace.

Just look at OpenAI’s artificial intelligence chatbot, ChatGPT. It reached 100 million monthly active users in two months.

Facebooklaunched in 2004. It took 4.5 years to get that many users. And it took music streaming app Spotify10 years to reach that level.

Exponential progress is giving life to AI, advanced robotics, autonomous vehicles, personalized medicine, and new forms of space travel.

And it’s leading to outsized stock market returns for folks who know what’s going on.

Leading AI chipmaker NVIDIA Corp. (NVDA) just hit a new all-time high. It’s now up about 850% since the start of last year. And it’s worth $3.4 trillion. That makes it the second-largest company in America by market cap after Apple Inc. (APPL).

Or take the Robotics and Artificial Intelligence ETF (BOTZ). It’s one of my favorite ETFs for investing in exponential progress. And it’s knocking on the door of its 52-week high.

A break above $33 would be a convincing validation of the bullish investment case I’ve been making about robotics and AI.

Of course, we’ve got to find ways to meet AI’s enormous power needs.

Why Uranium Stocks Are Hitting All-Time Highs

Training large AI models can require up to thousands of times more energy than typical computational tasks.

Some sources estimate that data centers dedicated to AI consume up to 15 times more energy per operation than those handling traditional workloads.

Nuclear energy fits the bill.

It’s the only clean “baseload” power option that can function on a massive scale.

Baseload power is the minimum continuous amount of electricity required to meet the basic demand of the grid. It’s needed to stabilize the grid. Without it, you risk blackouts and brownouts.

This is why nuclear is enjoying an exponential technological progress-powered renaissance. And why the popular uranium stock fund, the Global X Uranium ETF (URA), has surged higher.

And these trends are going to accelerate as AI continues to advance.

When AI Goes Supernova

The other day, somebody asked me what the next big thing would be for AI…

They meant the next event or product or service that captures the eyeballs and clicks and dollars of hundreds of millions of people. The next big thing that will drive massive interest.

I speculated that it would be a truly useful AI assistant. That would go supernova.

We all know Siri and Alexa are pretty basic. They can play music on command. They can tell you the weather forecast. They can do some other semi-useful basic things.

What most people want is for an AI app to hear something like “Get me a reservation for 4 at a great steakhouse within 15 minutes of my house for 6 p.m. on Saturday”… and then do it.

We want it to be great at finding hotels… flights… useful answers to medical questions… legal questions… and products to buy.

We want it to save us money, time, and frustration.

I figure once Apple, Google, Meta, or another Magnificent Seven tech stock introduces a truly useful AI assistant, AI interest will go up to a whole new level. It will finally be something we all use most every day.

Hypergrowth expert and InvestorPlace Senior Analyst Luke Lango agrees. He thinks it will be Apple Intelligence… which just started to roll out.

Here’s Luke...

Apple has so many customers and is such a high-profile company that it’s going to get high functioning AI into the hands of hundreds of millions of people.

It will be on your laptop… your tablet… your phone… even your watch. You will see people using it at the office, on trains, on buses, in the airport, in restaurants.

This will set off a tidal wave of demand for AI features and products from other companies… Plus set off a tidal wave of new demand for AI-related investments.

If you think AI is a hyped-up phenomenon now, you haven’t seen anything yet. Chat GPT was the Big Bang for AI. Apple Intelligence will be the second Big Bang.

Oh, and you may have noticed we have a highly polarized election coming up – one that will be fought over long after the last votes are cast.

That’s only going to accelerate an Age of Chaos already in hyperdrive.

That’s why Louis and Charles hosted their special pre-election broadcast, “The Day After Summit.”

They showed the folks who tuned in why election uncertainty could drag on for months… why this could cause stock market volatility to go through the roof… and the trading strategy you can use to turn this volatility into profits.

They even shared a trade you can make before the election to profit no matter who occupies the White House next.

So, if you haven’t already, make sure to clear some time in your schedule and watch the briefing now, before the election ushers in a new wave of chaos in the market.

To life, liberty, and the pursuit of wealth in this Age of Chaos,

Brian Hunt

Cofounder, CEO, InvestorPlace

The post Chaos Chronicles: How to Survive on This Runaway Train appeared first on InvestorPlace.

Several tech companies delivered good numbers last night, topping estimates and confirming both the resilience of the U.S. economy and strength of the AI Boom.

As we’ve been saying for weeks, the fundamental earnings trends underlying the stock market are very positive and highly supportive of continued stock market strength.

Last night, tech juggernaut Amazon (AMZN) reported very impressive quarterly numbers which underscored one powerful reality: AI can dramatically improve your business.

Just look at what Amazon’s doing. It is using AI across all its major operating businesses to boost revenues and profit margins.

How AI Supercharged AMZN Stock

On the retail side, Amazon is deploying more robotics to automate fulfillment and unlock operational efficiencies.

Its newest 12th generation robotic fulfillment center design, for example, is reducing fulfillment processing time by up to 25%, increasing the number of items it can offer for same-day or next-day delivery. What’s more, it’s expected to drive a 25% improvement in its cost to serve.

The result is that Amazon can deliver more products at lower prices (driving accelerated retail revenue growth) while simultaneously cutting expenses and boosting profit margins (driving huge profit margin expansion and even bigger profit growth).

Amazon saw both its online and physical retail sales growth rates accelerate in the quarter, while operating margins soared by about 300 basis points year-over-year.

On the advertising side, Amazon is rolling out genAI-powered creative tools across display, video, and audio, including a video generator that uses a single product image to curate custom AI-generated videos. This is driving increased engagement with the ad business and sustaining approximately 20% revenue growth in that business even as it grows.

Meanwhile, on the cloud side, Amazon Web Services – or AWS – has grown its AI business into a multibillion-dollar revenue run rate business that continues to grow at a triple-digit rate.

Indeed, AWS AI is growing more than three times faster at this stage of its evolution than AWS itself grew. The AI cloud business is absolutely surging right now, and that is driving sustained growth rates of around 20% for all of AWS.

Across its entire business, Amazon is figuring out how to harness the power of AI to improve its products, launch new products, and unlock operational efficiencies – the sum of which is driving accelerated revenue growth, big profit margin expansion, and huge profit growth.

Amazon’s revenue growth rate accelerated higher to 11% this past quarter. Profit margins expanded by almost 300 basis points. And operating profits rose more than 55%…

Ultimately, all these financial gains are driving stock market gains for AMZN, too. Amazon’s stock is rallying strongly today and is now up about 45% over the past year.

Big Tech Gets an AI Boost

Amazon is not alone here. Its Big Tech peers – including Alphabet (GOOGL), Microsoft (MSFT), and Meta (META) – are also all using AI to improve their business results.

Alphabet has improved Google Search with AI Overviews, Meta has improved Facebook and Instagram feeds with AI-powered recommendations, and Microsoft has improved Office 365 with 365 Copilot.

AI Overviews are driving increased Google Search usage…

AI-powered content algorithms are driving increased time spent on the Facebook and Instagram platforms…

And about 70% of Fortune 500 firms have signed up for Office 365 Copilot.

Alphabet, Microsoft, and Meta are all using AI to improve their existing products, and in response, usage of their existing products is rising strongly. Meanwhile, all three are also using AI to launch new products.

Alphabet has created its new AI model, Gemini. According to management, Gemini growth is surging right now. Meta has launched its own Meta AI assistant within its apps. That AI assistant already has 500 million monthly active users. And Microsoft has launched its AI-powered data analytics platform Fabric, which is already being used by more than 70% of the Fortune 500.

Meanwhile – like Amazon – Alphabet, Meta, and Microsoft are also figuring out how to drive operational efficiencies with AI. For example, both Meta and Alphabet reported several hundred basis points of profit-margin expansion this past quarter (same as Amazon).

The Final Word on AMZN Stock

So… Amazon, Alphabet, Meta, and Microsoft are all using AI to improve their existing products, launch new products, and boost profit margins, which is leading to supercharged revenue growth at all three firms and supercharged profit growth, too.

Folks, the AI opportunity is confirmed.

Sure, a lot of pundits out there are calling AI a bunch of hype and saying this is a bubble. But what Amazon, Meta, Microsoft, and Alphabet reported this week wasn’t hype. It was real revenue growth. It was real usage growth. It was real profit margin expansion. It was real profit growth.

It was proof that the AI Boom is real. It was confirmation of the huge AI opportunity. And further confirmation that AI stocks will likely remain the big winners on Wall Street so long as stocks keep pushing higher – which we think they will for the foreseeable future.

On that note, click here to check out a few AI stocks we’re following closely in our research services right now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Amazon Earnings Illustrate the Power of AI appeared first on InvestorPlace.

Despite today’s selloff, we could be on the verge of a huge stock melt-up.

Now, I write that as someone who’s concerned about this market’s lofty valuation. Frankly, I don’t believe a melt-up from here is warranted by fundamentals.

And yet, I highlight this as a real possibility…

One, a Fed that appears at risk of getting it wrong – again…

Two, a fresh wave of debt spending from the next president that will juice our economy, regardless of who takes office.

Let’s look at each.

In recent months, I’ve made the case for why caution is needed in today’s market. We’ve referenced nosebleed valuation indicators, greedy sentiment indicators, and various red-flag contrarian indicators, among other things. Frankly, it doesn’t take much to build a bearish case today.

But…

All of that might pale in comparison to the bullish variables possibly driving stock prices higher in the coming quarters. Let’s begin with the Fed.

It’s beginning to appear that the Fed got it wrong by going big with its jumbo 50-basis-point rate cut in September. And if the Fed continues cutting rates as traders expect, get ready for a resurgence in inflation and an asset bubble.

Stepping back, the Fed’s goal (as highlighted in its September’s SEP report) is to get long-term inflation back to 2.9% over the next few years. This is their estimate of the “neutral” rate, which is the theoretical rate at which the Fed is neither helping nor hurting the economy.

To be clear, this neutral rate is always changing, and it can’t directly be measured. This gray area creates the potential for error, often leading to the Fed applying too much gas or too much brake, sometimes resulting in bubbles and bursts.

Now, what if the Fed – which has been wrong about a lot since the Covid Pandemic – is wrong yet again about the neutral rate at 2.9%?

They are, according to �������°�’s favorite economist, Ed Yardeni.

In making the case for this, he highlights a handful of economic factors. But I want to zero in on the most significant one – our government’s spending.

From Yardeni:

Productivity growth may be one of the most important factors in determining the neutral interest rate. There are lots of other moving parts undoubtedly, including the federal budget deficit.

Over the past three years, it has been at a record high during a period of solid economic growth. Yet inflation has moderated.

Large fiscal deficits have boosted economic growth and offset the recessionary impact of the tightening of monetary policy.

Again, the conclusion must be that the neutral interest rate has been increased by the current administration’s fiscal policy. Fed officials may be in denial about this because they are so committed to being nonpolitical that they avoid discussing fiscal policy.

What Yardeni is saying helps explain why we never suffered the recession that virtually all economists predicted would hit us in 2023. After all, it’s hard to have a recession when your government floods the economy with trillions and trillions of newly created currency.

If you forgot what that looks like, here’s our M2 Money Stock after 2020…

Much of which found its way onto the Fed’s balance sheet…

And the housing market…

So, if the Fed is wrong about the neutral rate, then its 50-basis-point cut in September and whatever cuts we get from here risk overshooting the mark. And that risks spurring inflation and an asset-price runup.

Keep in mind, if Yardeni is correct that the neutral rate is at least 4% – let’s call it 4.25% – then the Fed’s current target rate of 4.75% – 5.00% isn’t much higher than where we already are.

Here’s Yardeni’s bottom line:

Our conclusion is that if the Fed continues to lower the federal funds rate, monetary policy will most likely stimulate an economy that doesn’t need to be stimulated.

The result could be rebounds in both price and asset inflation rates. The latter is certainly underway in the stock market.

This morning, we got the latest reading on the Fed’s favorite inflation – the Personal Consumption Expenditures (PCE) Price Index.

Headline year-over-year inflation came in at 2.1%, which was in line with estimates.

However, core PCE (which the Fed prefers since it excludes volatile food and energy prices) came in at 2.7% on the year and 0.3% on the month. The annual rate was 0.1% higher than forecasts.

Remember, the Fed’s goal is 2% inflation, and it just came in at 2.7%. So, inflation remains 35% above target, and yet the Fed has already eased up on the brake via a 50-basis-point cut, and even more easing appears to be on the way.

Perhaps the neutral rate really is at 2.9%. But if it’s at 4%+, let’s remember Yardeni’s warning above:

The result could be rebounds in both price and asset inflation rates. The latter is certainly underway in the stock market.

Vice President Harris and former President Trump have their differences, but both are likely to spend ungodly amounts of money as president.

Here’s the Committee for a Responsible Federal Budget:

Our large and growing national debt threatens to slow economic growth, boost interest rates and payments, weaken national security, constrain policy choices, and increase the risk of an eventual fiscal crisis.

However, neither major candidate running in the 2024 presidential election has put forward a plan to address this rising debt burden.

In fact, our comprehensive analysis of the candidates’ tax and spending plans finds that both Vice President Kamala Harris and former President Donald Trump would likely further increase deficits and debt above levels projected under current law.

The report goes on to estimate that under Harris, debt would jump by nearly $4 trillion by 2035. Under Trump, the forecast is almost $8 trillion.

With this in mind, let’s again revisit Yardeni:

Large fiscal deficits have boosted economic growth and offset the recessionary impact of the tightening of monetary policy.

$4 trillion here… $8 trillion there…

Based on the melt-up in asset prices after the trillions of pandemic-related debt spending from the government, it is not crazy to expect another inflation/asset price surge.

Speaking on a “telephone town hall” with supporters Tuesday, Musk said:

We have to reduce spending to live within our means. That necessarily involves some temporary hardship, but it will ensure long-term prosperity…

I think once the election takes place we’ll immediately begin looking at where to take the most immediate action.

He described government spending as “a room full of targets. Like, you can’t miss.”

When a commentor heard this and predicted on X that the fallout would be: “An initial severe overreaction in the economy” and that “Markets will tumble,” Musk didn’t push back. He wrote back:

Sounds about right.

To me, this has shades of Argentinian President Javier Milei and his “chainsaw” approach to government waste. It could have an enormous impact on capital flows in the stock market.

For example, billionaire investor John Paulson said he would work with Musk on cutting federal spending. And according to The Wall Street Journal, President Biden’s green energy subsidies would be on the chopping block:

“All of these tax subsidies for solar, for wind, inefficient, uneconomic energy sources,” said Paulson. “Eliminate that. That brings down spending.”

While I find the idea of cutting waste appealing, I’m skeptical. Our entrenched government bureaucracy – the direct beneficiary of this wasteful spending – will do everything in its power to preserve its existence.

It seems improbable that the market might continue to soar after its incredible performance here in 2024 (up 20%).

But we have a Fed that appears at risk of inadvertently juicing the economy by misreading the neutral rate. And we have a new president that – barring a Black Swan, Elon Musk slash-a-thon – will continue to spend trillions, further juicing our economy.

Yes, the rational, valuation-oriented part of me is screaming “beware this market!” and I do remain cautious.

But history shows that valuations can soar far higher than would seem rational when huge, macro forces are driving them. 

Our challenge is to be prepared for both scenarios.

If you missed legendary investor �������°� and our geopolitical expert, Charles Sizemore speak about the potential for election chaos this past Tuesday, I recommend you check out the free replay as soon as you can. They made a prediction about what’s coming, and I doubt it’s what you think it is.

I’ll note that these two experts are no strangers to bold predictions that play out. It was last December that they said Joe Biden would be replaced on the Democratic ticket.

If you’re concerned about post-election volatility and how to address it in your portfolio, I recommend you listen to their latest prediction, and what they’re urging investors to do about it.

We’ll keep you updated on all this here in the Digest.

Have a good evening, and a Happy Halloween,

Have a good evening,

Jeff Remsburg

The post The Case for a Market Melt-Up appeared first on InvestorPlace.

The presidential election is less than a week away… and with it, the potential for postelection chaos.

If the election is as close as it looks now, we all know that this havoc could span the days and months till Election Day.

But you may not realize that this chaos has the potential to last years after this election ends.

That’s because both candidates are promising voters the moon… and will need to empty the coffers in order to pay for the moon.

In this cycle, we have pledges from both sides to…

• Extend the 2017 Tax Cuts and Jobs Act
• Eliminate taxes on tipped wages
• Maintain Social Security spending at current levels
• Reduce taxes on the middle class

Now, most of that’s great news in the short term.

Investors salivate over the potential “goodies” consumers and corporations will receive and bid up stocks as a result. Since 1928, markets have returned 11.3% during presidential election years, according to data from Morgan Stanley, with 19 out of 23 election years providing positive performance.

But the long-term outcome is not so pretty.

According to T. Rowe Price, shares of the S&P 500 have underperformed the median by -4.3% in the year after the election. In fact, more than half of postelection years (54%) overlapped a recessionary period.

However, we still believe that markets tend to be overoptimistic going into elections… only to be disappointed when campaign promises turn out to cost far more than expected and take far more time to materialize.

Here’s what this means for the next 6 to 12 months…

The Election on Steroids

The 2024 election has been a caricature of past cycles. The S&P 500 already is up 23% so far this year – its best 10-month performance in the 21st century. The tech-heavy Nasdaq-100 index is up 26%.

Much of this has to do with the unusually generous stimulus packages both sides are promising for the economy. In addition to the assurances mentioned above, there are pledges to expand the child tax credit… bring back manufacturing with tax incentives… cut the prices of groceries and fuel… and so on.

In fact, the nonpartisan Tax Foundation believes that both Donald Trump’s and Kamala Harris’s plans will send the national debt to more than 200% over 10 years. If this happens, it will mark the largest deficit spending by the U.S. government in a non-war period.

Hyper-partisanship is also playing a major role. Both sides have run this race on “vibes,” leaving investors hearing only the good parts of both candidates’ plans without any details on how things will run. There is little incentive for either side to give any details on their plans.

The result has been a surge in average valuations. The Shiller PE Ratio, which averages earnings over a 10-year business cycle, now sits at 37.0, its highest level since the heady days of 2021.

AI stocks are particularly pricey, with companies like Amazon.com.com Inc. (AMZN) trading at 40 times forward earnings.

Of course, this unusually large preelection boost will likely be met with an equally significant postelection hangover. When the Shiller PE Ratio was last at this level in December 2021, stocks tumbled 19% over the following year.

And as for all the campaign promises that could push the debt-to-GDP ratio to those seen by Japan? That also puts the U.S. government on track to spending a quarter of all tax revenues on debt servicing.

Where to Hide Your Money

Each election tends to create its own mini-bubbles. The 2004 cycle saw a burst of buying in telecom stocks after President George W. Bush laid out a plan for universal broadband availability by 2007. The state of New Jersey went as far as to call 2004 “The Year of Telecommunications.” The industry – as measured by iShares Communication Services ETF (IXP) – rose 16% in 2004 before plummeting -9.1% the following year.

The 2008 cycle saw a similar rush into defensive stocks by investors who expected a drawn-out recession. Consumer staples, a defensive segment, went from being the best-performing sector in 2008 to the third-worst-performing one in 2009.

Today’s high market valuations include even higher prices in real estate, clean energy, and AI. Data center REIT Digital Realty Trust (DLR) trades at a miserly 2.7% yield, while Tesla Inc. (TSLA) is valued at 90X earnings. History tells us that these pricey stocks tend to go higher in the short term before disappointing investors with mediocre returns over longer periods.

As always, our recommendation is to avoid these companies at tippy-top valuations and invest in high-quality growth companies trading at reasonable prices instead.

To further arm yourself against election-cycle volatility, my InvestorPlace colleague �������°� introduced a quantitative tool that that thrives in chaos during his “Day-After Summit” earlier this week.

According to back-testing, his system has outperformed the market by a 6-to-1 ratio since 1990… and we believe that it will help you navigate volatile markets ahead.

You’ll want to be sure to get ahead while you still can. You can click here to access the special broadcast.

Regards,

Thomas Yeung

Markets Analyst, InvestorPlace

The post The Chaos in the Days After the Day After the Election Could Be Worse appeared first on InvestorPlace.

But with 170 S&P 500 companies releasing earnings this week, we’re seeing more tricks than treats. This includes reports from five of the Magnificent Seven: Alphabet Inc. (GOOGL), Amazon.com, Inc. (AMZN), Apple, Inc. (AAPL), Meta Platforms, Inc. (META) and Microsoft Corporation (MSFT).

Now, one member, AI chip leader NVIDIA Corporation (NVDA), reports on November 21. And the other Magnificent Seven stock, Tesla, Inc. (TSLA), reported last week. (We reviewed TSLA’s earnings in last Thursday’s Market 360.)

Wall Street pays close attention to their earnings because the Magnificent Seven stocks aren’t your average tech stocks – they were huge benefactors at the beginning of the artificial intelligence craze. Not to mention that they make up a significant percentage of the S&P 500’s market capitalization.

The big question on Wall Street’s mind is: Are their investments in AI paying off in profits?

So, in today’s Market 360, we’ll dig into Alphabet’s, Meta Platforms’ and Microsoft’s earnings reports. I’ll also share if they are good buys following their results. (We will review Amazon and Apple during your Saturday Market 360, so be on the lookout for that.)

On Tuesday, after the market closed, Alphabet announced results that topped Wall Street’s expectations.

For its third quarter, the company reported earnings of $2.12 per share and sales of $88.3 billion, up from earnings of $1.55 per share and revenue of $76.7 billion. That translates to a 36.8% year-over-year earnings gain and a 15.1% year-over-year revenue boost. Analysts were calling for earnings per share of $1.85 and revenue of $86.22 billion, so the company posted a 14.7% earnings surprise and a 2.4% revenue surprise.

You can see how Alphabet’s third-quarter revenue stacks up against previous quarters in the chart below.

Digging a little deeper into the report… Google’s all-important advertising revenue rose 10.4% to $65.85 billion, topping expectations of $65.5 billion. Meanwhile, YouTube ad revenue rose 12.2% to $8.9 billion. But the shining star comes from Google Cloud revenue, which increased 34.97% year-over-year to $11.4 billion, besting analysts’ estimates.

During Alphabet’s earnings call, CEO Sundar Pichai, stated:

Our commitment to innovation, as well as our long-term focus and investment in AI, are paying off with consumers and partners benefiting from our AI tools.

In Search, our new AI features are expanding what people can search for and how they search for it. In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals.

Now, I would be remiss if I didn’t note the issues Alphabet has been facing lately with the Department of Justice (DOJ). Recently, the DOJ won a court case related to Alphabet’s dominance of the search engine market. This essentially ended up with Alphabet being declared an unlawful monopoly. The DOJ is now struggling to figure out whether to break up the company – and if so, how to do it.

In my opinion, the DOJ is now a bit like “the dog that caught the car.” DOJ lawyers have proposed a number of “remedies” to the presiding judge, and it reportedly wants to “futureproof” Alphabet from using AI to maintain its dominance.

The problem, though, is that Alphabet’s search engine remains superior to its competitors. So, I think its monopoly status will persist unless the court does something really drastic. Ultimately, I predict that the DOJ will not be able to successfully break up Alphabet since advertising from Alphabet accounts for the vast majority of its business.

Regardless, none of this impacted its earnings report, and investors still cheered the results, sending GOOGL as high as 7.4% on Wednesday.

I should add that GOOGL has a Total Grade of “C” in Stock Grader right now (subscription required). That makes it a “Hold.” So, if you own GOOGL, I wouldn’t sell it – but I would also look for other opportunities if you are looking to buy.

Meta’s Jump Scare

Meta Platforms released its third-quarter results yesterday afternoon. Revenue increased 19% year-over-year to $40.59 billion, beating Wall Street estimates for revenue of $40.31 billion.

Meanwhile, earnings per share jumped 37% year-over-year to $6.03 per share, up from earnings of $4.39 per share in the same quarter of last year. Analysts were calling for earnings of $5.29 per share.

Facebook’s daily active users rose 5% year-over-year to 3.29 billion, which came in just lower than expectations of 3.31 billion.

Unfortunately, in Meta’s earnings release, CFO Susan Li shared that the company “continues to expect significant capital expenditures growth in 2025,” which spooked investors. Then, during the company’s earnings call, CEO Mark Zuckerberg stated that AI is the big theme for the company right now:

Across Facebook and Instagram, advances in AI continue to improve the quality of recommendations and drive engagement… AI is also going to significantly evolve our services for advertisers in some exciting ways.

Looking ahead to the fourth quarter, Meta now expects revenue to be between $45 billion and $48 billion. That would equate to about a 21.6% improvement from 2023’s fourth-quarter revenue, which was $36.5 billion to $40 billion.

Unfortunately, investors weren’t pleased with this report – especially after Meta raised its capital expenditure estimates for the year to between $38 billion and $40 billion, up from $37 billion to $40 billion previously. As a result, shares of META dropped 4.1% today.

Meanwhile, META has a Total Grade of “A” in Stock Grader, making it a “Strong Buy.”  So, if you want to buy on the dip, now may be a good time.

Microsoft’s Tricky Outlook

Microsoft released its earnings report for its first quarter in fiscal year 2025 after the closing bell yesterday.

The company reported earnings of $3.30 per share on revenue of $65.6 billion. That’s up from $2.99 per share and $56.5 billion in the previous year. This translates to 10.4% year-over-year earnings growth and 16.1% year-over-year revenue growth. Analysts anticipated $3.10 per share earnings on revenue of $64.56 billion.

Now, one of Microsoft’s most closely watched divisions is its Intelligent Cloud platform. And the strength in this division was a key driver in the company’s results. Cloud revenue increased 21% year-over-year to $24.1 billion. Microsoft highlighted that Azure and other cloud services revenue was up 33% which came in just above estimates for 32.8%.

In the earnings release, Microsoft CEO Satya Nadella noted:

AI-driven transformation is changing work, work artifacts, and workflow across every role, function, and business purpose. We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage.

The company also provided forward-looking guidance for the second quarter. Company management anticipates revenue between $68.1 billion to $69.1 billion. The big sticking point here is that Intelligent Cloud revenue is only expected to see revenue of $25.55 to $25.85 billion.

So, even though Microsoft bested expectations and gave good insight into its AI investments, this “light” guidance disappointed Wall Street, and the stock dropped by 6.1% today.

Right now, MSFT earns a Total Grade of “C” in Stock Grader, making it a “Hold.” In fact, that has been the case for much of this year.

More Market Scares Ahead?

Microsoft’s and Meta’s mixed earnings spooked the broader market today; the Dow slipped 0.9%, while the S&P 500 declined 1.9% and the tech-heavy NASDAQ dropped 2.8%. And unfortunately, I don’t think the volatility is done with the market just yet.

The presidential election is now five days away, and we could see some big swings in the market after election day.

However, as investors, that doesn’t mean we can’t use the chaos to our benefit. That’s why I hosted my “Day-After Summit” with The Freeport Society’s Chief Investment Strategist, Charles Sizemore this past week… because my friend Charles believes he has the solution.

By tracking the moves of deep-pocketed Wall Street investors, he can help investors turn the coming volatility into profits.

Charles even gave away a free post-election trade that’s designed to pay off no matter who wins the election. But with election day right around the corner, time is running out to properly prepare your portfolio for the potential post-election chaos.

If you haven’t already, click here now and a replay of our “Day-After Summit.”

Sincerely,

�������°�

Editor, Market360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Microsoft Corporation (MSFT) and NVIDIA Corporation (NVDA)

The post Did These 3 Magnificent Seven Stocks Deliver Tricks or Treats This Earnings Season? appeared first on InvestorPlace.

Now, I know that since late 2022, we’ve been hearing about AI’s potential almost non-stop. News reporters, technologists, and investors alike have been hyperfocused on this emerging industry. 

After all, artificial intelligence encompasses a massive technological revolution. And in our view, it represents one of the biggest investment opportunities of our lifetimes. 

But it’s one thing to hear that from a bunch of “outsiders” – and another to see it from within the world’s tech titans themselves. 

Well, this week, we got an update straight from the horse’s mouth, if you will. 

Alphabet, Microsoft, and Meta all breezed revenue and profit estimates in their latest quarterly reports. Alphabet reported 15% revenue growth. Microsoft reported 16% revenue growth, and Meta achieved 19% revenue growth. 

In other words, all grew profits by more than 10%. And each drove those strong results in large part because of artificial intelligence.

Driving Robust Growth With AI

In short, these Big Tech firms have figured out how to use AI to enhance their businesses. All three are leveraging AI to improve their existing products, launch new offerings, and boost profit margins. 

For example, when it comes to existing products, Alphabet has improved Google Search with AI Overviews. Meta has refined Facebook and Instagram feeds using AI-powered recommendations, and Microsoft is using its 365 Copilot to better customers’ Office 365 experience. 

And these efforts are paying off in spades. Alphabet’s AI Overviews are driving increased Google Search usage. AI-powered content algorithms are leading to increased time spent on the Facebook and Instagram platforms. And about 70% of Fortune 500 firms have signed up for Office 365 Copilot. 

Alphabet, Microsoft, and Meta are all using AI to improve their existing products. And as a result, usage of their existing products is rising strongly. 

Meanwhile, all three are also using AI to launch new products. 

Alphabet has created a new AI model, Gemini. According to management, Gemini growth is surging right now. 

Meta has launched its own Meta AI assistant within its apps – and it already has 500 million monthly active users. 

And Microsoft has launched an AI-powered data analytics platform, Fabric, which is already being used by more than 70% of the Fortune 500. 

Amidst all this growth, all three Big Tech firms also reported strong profit margin performance – with both Meta and Alphabet reporting major expansion therein. Indeed, Meta recorded net profit margins of 38.65%, while Alphabet achieved profit margins of 29.79%. 

And this is all the product of Meta, Alphabet, and Microsoft figuring out how to use AI internally to boost efficiency.

The Final Word

So, three of the world’s largest companies are all using AI to improve their existing products, launch new offerings, and boost profit margins. 

And that is leading to supercharged revenue growth at all three firms… not to mention, supercharged profit growth, too. 

Clearly, there sure is something to all this AI mania. 

Sure, a lot of pundits out there believe AI is just a bunch of hype and a bubble waiting to burst. But what Meta, Microsoft, and Alphabet reported this week wasn’t the product of hype. It was real revenue, profit, and usage growth. It was real profit margin expansion. 

And as such, it was proof that the AI Boom is the real deal – and confirmation that it may offer the investment opportunity of a lifetime. 

AI stocks will likely remain the big winners on Wall Street, so long as stocks keep pushing higher – and we expect they will for the foreseeable future.

That means now is the time to be invested in the AI stocks poised to soar alongside a continuing market rally. But with so much investor hype and market noise going on, uncovering tomorrow’s winners is no small task. 

If you want to get positioned for profits in the Age of AI, check out the stocks we’re following closely in our research services right now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Big Tech Earnings Put AI’s Profit Potential on Full Display appeared first on InvestorPlace.

Bitcoin appears to be pricing in a Trump victory.

Yesterday, the granddaddy crypto pushed above $73,000 for the first time since March. As I write Wednesday morning, it’s pulled back slightly, but still holding $72,000 and up 34% since its September low.

Now, we should be cautious about how much of this climb we attribute to Trump (the rumor of a fresh wave of Chinese stimulus is also a factor), but there is a link.

The market views Trump as more supportive of the crypto world than Vice President Harris. And as Trump appears to have gained a slight momentum edge in recent days, Bitcoin has responded.

Diving into the perception that Trump is more “pro Bitcoin” than Harris, let’s rewind to July when Trump gave the keynote speech at the Bitcoin Conference in Nashville:

This afternoon, I’m laying out my plan to ensure that the United States will be the crypto capital of the planet and the Bitcoin superpower of the world, and we’ll get it done.

We will have regulations, but from now on, the rules will be written by people who love your industry, not hate your industry.

The former president went on to make a handful of promises in that speech, all very bullish for crypto.

One of the few comments she’s made on the subject came from a fundraiser in New York back in September:

We will encourage innovative technologies like AI and digital assets, while protecting our consumers and investors.

Without much else to go on, investors have mostly assumed that Harris’s stance would largely mirror that of President Biden. This is a reasonable assumption, as Harris did say in her recent interview on the TV show, The View, that “not a thing comes to mind” when asked what she would have done differently than President Biden.

With that context, Biden vetoed H.J. Res. 109. This legislation would have overturned a controversial, hawkish SEC bulletin.

Here’s CoinGeek explaining:

[H.J. Res.109 required] entities that custody digital assets for others (such as banks and financial institutions) to recognize these assets on their balance sheets.

This forced custodians to treat the assets as though they owned them, significantly impacting their accounting practices and capital requirements.

However, it isn’t clear how much banks would have to hold against digital assets, which deterred a number of big firms—including BNY Mellon, State Street and Nasdaq—from getting involved in digital asset custody…

Joe Biden made it clear that the digital asset industry is to be controlled not supported.

Now, even if Harris becomes president, we expect higher prices for Bitcoin, though the immediate reaction might be less enthusiastic than if Trump wins.

You see, there’s one factor that we believe will push Bitcoin’s price materially higher in 2025 and beyond, regardless of who’s in the White House…

Dollar debasement.

Yes, due to different policies from Trump and Harris, there are certain moves you want to make with your wealth today in the lead-up to the presidential election. But one area where both candidates will be very similar is enormous deficit spending.

Sure, we could argue about who will spend more, but that would be pointless. Both will embrace deficit spending that will eat into the purchasing power of your dollars as collateral damage.

In yesterday’s Digest, I interviewed Charles Sizemore, the CIO of our corporate partner, the Freeport Society. We discussed dollar debasement in preparation for last night’s “Day-After Summit” with Charles and legendary investor �������°�.

Here’s part of what Charles said:

If there is one thing that you must absolutely protect yourself against, it is the sandpaper effect of dollar debasement and inflation, which go hand-in-hand.

You can do that a couple of ways: buying good blue-chip stocks – that’s a theme of ours in The Freeport Society…

Gold is another way to protect yourself. Cryptocurrencies, real estate, all of that comes into play.

Behind this is the reality that there are certain economic and investment trends that neither presidential candidate will stop. So, if we see any emotion-based selloffs surrounding the election, it’s an opportunity, not a threat.

Back to Charles:

If you look at the biggest macro trends that are going to dominate – and already are dominating – it doesn’t really matter who wins the election.

Take artificial Intelligence, for example. That is already happening. It’s going to continue to happen. Every major corporation is pouring tens if not hundreds of millions of dollars into developing AI tools.

If Trump wins, there may be a slightly more lax regulatory regime that speeds that up ever so slightly. But it’s not like Harris victory would change the course here. It’s still happening, no matter what.

If you missed last night’s event with Charles and Louis, they provided their playbook for how to handle election volatility, using it as a money-making opportunity, not a Black Swan event to fear. You can catch a free replay right here.

Yesterday, our CEO Brian Hunt sent an internal email to a few analysts here at InvestorPlace. It included a scan of “quality growth” stocks that are breaking out. These are companies with fantastic fundamentals and stocks that just a hit a one-month high.

There’s a recurring theme: AI.

Let’s start with the returns. Here four of the top stocks from that scan, along with their one-month and one-year performance, respectively:

As to “AI,” every one of these stocks is utilizing artificial intelligence, despite operating in vastly differing sectors.

To illustrate, in my Google browser, I typed, “Does (insert company name) use AI?”

Here are the annotated results:

• Yes, Protagonist Therapeutics uses AI and advanced analytics tools to optimize marketing strategies…
• Yes, Iris Energy uses AI. The company has been expanding its AI cloud services business, purchasing GPUs to increase its capacity…
• Yes, Celestica Inc. uses AI in its products and services. [It] manufactures and sells connectivity products and storage solutions for AI data centers…
• Yes, Argan, Inc. uses AI in its stock analysis.

The rest of Brian’s list was overwhelmingly populated with companies implementing AI.

Tying back to my interview yesterday with Charles, these returns corroborate his bottom line on artificial intelligence and the presidential election:

AI is bigger than Trump. It’s bigger than Harris. It’s bigger than politics.

Regular Digest readers know that beyond helming InvestorPlace, Brian is an accomplished investor/trader in his own right. Given that, you might find his commentary in his email about AI winners interesting:

My recommendation to investors: Get out there and get your share. We’re in a full-blown technology boom. Gale force tailwinds of wealth creation are blowing.

Yes, we could be in for some election volatility. And yes, you need to protect your wealth from debasement regardless of if it’s Trump or Harris…

But a portfolio filled with monster AI winners (and from the looks of it, Bitcoin) goes a long way toward wealth protection.

Have a good evening,

Jeff Remsburg

The post Who’s Better for Bitcoin? Trump or Harris? appeared first on InvestorPlace.

The RealClearPolitics Betting Average tracks odds from sportsbooks and prediction markets.

It’s a snapshot of how bettors are viewing the outcome of the election.

And it gives Trump a 64% chance of winning the White House.

That sounds about right.

Despite what his detractors say, he’s now more popular than ever among voters. And recent polling shows him making gains nationally and in key swing states.

But I’ve been a professional investor for more than 40 years. And I can’t ignore what stock market history says about the prospect of a shock win for Kamala Harris.

This from Kiplinger…

In the 23 presidential elections since 1928, 14 were preceded by [stock market] gains in the three months prior. In 12 of those 14 instances, the incumbent (or the incumbent party) won the White House. In eight of nine elections preceded by three months of stock market losses, incumbents were sent packing.

That’s an 87% accuracy rate.

The benchmark U.S. stock market index, the S&P 500, is up about 7% since the start of July. The Dow and the Nasdaq are also showing gains over that time.

If history is any guide, Harris, not Trump, is likely to be the next president of the United States.

And that’s not the only indicator pointing to a Harris win.

Since 1932, the incumbent party has always won reelection unless a recession occurred during the current term (in this case, President Biden’s term).

And right now, no matter how folks may be feeling about the U.S. economy, it’s not in recession.

Data released today shows it grew at an annualized rate of 2.8% in the recent quarter. That’s less than forecast. But it’s nowhere near recession levels.

But as I told the more than 5,500 folks who joined me for my free-to-view “The Day-After Summit” last night, the real story I’m preparing for is not what happens on Election Day.

It’s what could be coming the day after– next Wednesday, November 6.

It doesn’t matter who you’re voting for. That’s when unprecedented social strife could be unleashed as both sides contest the election.

It could also set off a chain reaction on Wall Street – including a bout of massive stock market volatility.

This could be the most bitterly fought post-election battle in modern U.S. history – worse than Gore v. Bush in 2000 and Trump v. Biden in 2020.

Now, the best thing we can hope for is a clear winner on November 6. But I wouldn’t be surprised if we still didn’t have a clear winner come Inauguration Day, on January 20, 2025.

Fortunately, there’s a way you can not only avoid big potential losses… but also profit… as the most chaotic chapter of the election plays out.

First, it’s important you understand that this isn’t my first big election call.

“Age of Chaos” Is Entering Warp Speed

Back in December 2023, I made a presentation about the “Californication” of America.

I warned that Biden would drop out of the presidential race and be replaced by a California Democrat who would spread the state’s ultra-liberal policies across America.

(I predicted that candidate would be California governor Gavin Newsom, not former California Attorney General Kamala Harris. But the results would be the same.)

I also warned that we were entering an “Age of Chaos” – a time of unprecedented chaos and danger for Americans.

That presentation has now been viewed more than 3.2 million times. Folks who tuned in heard the steps I’ve recommended taking to prepare.

But none of that compares to the volatility that could happen next week, as the Age of Chaos enters warp speed.

You see, this isn’t about the votes we cast for president.

On November 7, the 12 members of the Federal Open Market Committee (FOMC) will meet behind closed doors at the Federal Reserve building in Washington, D.C., to vote on their policy for key interest rates.

Right now, markets are expecting a quarter-point cut to follow the half-point cut we got in September. But it could be another half-point cut. Or the Fed could decide to leave rates where they are.

That’s three more market-moving variables that will compound uncertainty after the election.

In normal times, Fed decisions are big market drivers. But this is coming right after perhaps the most contentious presidential election in modern history. The entire country will be on edge.

That could lead to even more severe stock market volatility as these two shocks hit our political and financial systems at once. Stocks could whipsaw violently as investors try to cope with all the uncertainty.

And from what I’m hearing, investors are already getting nervous…

Yesterday, a colleague said she recently called her broker about a routine question about her IRA. He immediately asked, “Are you calling me to move your money out of the markets?”

He went on to say he’d had a deluge of such calls over recent days due to fears of election chaos.

You may be worried about your own nest egg.

And that’s only natural. We’re humans, after all. And as humans, we tend to crowd-source our decision-making, especially when we’re facing fear and uncertainty.

That’s as true today as it was 200,000 years ago.

Don’t Let Crowd Behavior Kill Your Portfolio

Imagine you and your hunter-gatherer tribe are moving to a place with more fresh water.

On your way, you spot dozens of terrified members of another tribe running for their lives with terrified looks in their eyes. It’s a human stampede.

Your instincts will tell you to run like the wind. It doesn’t matter if you can’t see a saber-toothed tiger or a rival tribe brandishing their spears. You just know it’s time to run.

This crowd instinct is one of the reasons we survived in the wild and became the dominant species on Earth.

But the urge to join a stampeding crowd can kill your stock portfolio.

The human brain is a marvelous tool for creating art, music, language, and feats of engineering. It’s a terrible tool for investing.

That’s why, during my “Day After Summit” last night, I laid out an alternative approach to navigating the post-election chaos.

It has nothing to do with following your instincts… or with human emotions.

Instead, it’s a quantitative system I consider to be the No. 1 tool for anyone looking to turn uncertain macroeconomic, financial, or political events into outsized stock market gains.

In backtests, it’s identified 3,500 stocks that have gone on to soar 1,000% or higher.

And the greater the volatility, the greater the potential gains.

That volatility could be from a bitterly contested election. It could also be from any number of shocks that hit the market as the Age of Chaos plays out.

Whether it’s a currency shock…

Another supply chain issue…

A new law within the next president’s first 100 days in office…

A new war breaking out…

Or a powerful new technology transforming the world…

If a shock event causes volatility to flare up, this system shows you how to trade it for gains.

You can get full details of how it works, and how you can use it to position yourself to profit ahead of Election Day, by watching the replay of last night’s broadcast here.

To get you started, I’ve included details of one trade you can place right now that I believe will pay off… no matter who’s eventually declared the winner.

And if targeting short-term gains using a quantitative system is not your thing, that’s fine, too.

Just remember that the worst thing you can do when volatility kicks up is to panic sell out of your long-term stock holdings.

The point is, we could be in for a trying couple of months. But eventually, we’ll have a new president. And markets will return to a more stable footing.

You just may need plenty of patience… and a strong stomach… to ride out the churn between now and then.

Sincerely,

�������°�

Editor, Market360

P.S. I’ve been working on quantitative models since I was in college in the 1970s. And I’ve built a reputation on Wall Street for pioneering this approach to investing. I’ve even been called the “King of Quants” for my work in this area.

And this year, I’ve closed out the following big wins using quantitative analysis…

• Rambus, Inc. (RMBS), 133% in 17 months
• Super Micro Computer, Inc. (SMCI), 593% gain (1/3 sell)
• Gatos Silver, Inc. (GATO), 46% in one month
• e.l.f. Beauty, Inc. (ELF), 69% in 16 months
• Atkore, Inc. (ATKR), 81% in 28 months
• Axcelis Technologies, Inc (ACLS), 81% in 25 months
• Black Stone Minerals LP (BSM), 55% in 24 months
• PBF Energy, Inc. (PBF), 67% in 19 months

So, I know that this approach to investing can yield extraordinary results.

That’s why I hope you’ll hear what I have to say about the opportunity to profit in the weeks and months ahead. I have a proven track record stretching back decades in this type of investing.

And I want to make sure as many folks position themselves to profit as possible.

To catch the reply of my pre-election summit… and find out more about it… here’s that link again to watch the replay.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

e.l.f. Beauty, Inc. (ELF) and Super Micro Computer, Inc. (SMCI)

The post 87% Chance of a Kamala Win? Here’s How to Prepare… appeared first on InvestorPlace.

And if you’re looking for ways to profit in the face of this chaos, embrace a quant system designed to turn market chaos into opportunity. InvestorPlace Senior Analyst �������°� shared this system and the strategy fueling it during last night’s “Day After Summit.” This system is designed not only to shield your portfolio from volatility but to leverage it for potential gains. Click here to watch the special broadcast.

InvestorPlace CEO Brian Hunt wrote the book – literally – on the “Age of Chaos” we all find ourselves living through. So today, he is joining us to talk more about how next Tuesday’s election is only going to accelerate the Age of Chaos into hyperdrive. 

Hello, Reader. 

“We’re entering an Age of Chaos…” 

That was the call I made in my book that went out to select InvestorPlace subscribers back in December 2023. 

In that book, I argued that the 2020s would be one of the most dangerous, exciting, chaotic, and opportunity-filled decades in U.S. history. 

All thanks to several colossal megatrends slamming into the world simultaneously.  

As we’ll look at today, those “Chaos Agents” are not slowing down. Instead, they’re entering warp speed.  

In fact, we’re on a runaway train, speeding toward disaster. Prepare now, and you can save your wealth… even grow it. InvestorPlace quant genius �������°� and Freeport Society Chief Investment Strategist Charles Sizemore went into detail about how to do this last night at their “Day After Summit.” Click here to watch the presentation.

Dollar Hedges Are Soaring 

One of these Chaos Agents is something I call the Four D’s – Debt, Deficits, and Dollar Debasement.  

Most major governments around the globe have promised too many things to too many people. They’re struggling under giant debt loads and unfunded liabilities.  

These can’t possibly be paid with sound, honest money. They can be paid for only with ever increasing amounts of debased, diluted money.  

This is producing major currency debasement and financial market chaos. 

And with Donald Trump’s idea of doing away with the federal income tax and Kamala Harris’s idea to cut taxes for 100 million Americans, this situation is only going to get worse after November 5. 

Just how bad is it in America?  

Consider the latest figures from the government on tax inflows and spending outflows.  

Interest on the national debt is $882 billion so far in 2024. National defense spending is $874 billion. That means we’re spending more on interest payments than we are on national defense. It’s insane. 

Most voters and their political leaders have no interest in cutting spending, and so I stand by what I’ve said for years: All roads lead to more dollar debasement.  

This is why gold, silver, and other dollar hedges are soaring.  

And if I’m right about the Four D’s, they’ll go higher from here… probably much higher. 

Charle’s paid-up Freeport Investor subscribers are positioned to profit. 

He added a gold exchange-traded fund to the model portfolio when we launched The Freeport Investor just over a year ago. 

Since then, it’s up 35%.  

Exponential Progress Is Giving Life to AI 

Another Agent of Chaos I talked about in my book is exponential technological progress. 

After years of advancing at relatively modest rates, computers are now advancing at mind-blowing exponential rates.  

Every year, computers get faster and more powerful. They also get cheaper and smaller. 

This trend has massive implications for the economy. It makes it so our world is changing at ever increasing rates. It means new industries are being created at light speed… while demolishing old businesses at the same pace.  

Just look at OpenAI’s artificial intelligence chatbot ChatGPT. It reached 100 million monthly active users in two months. 

Facebook launched in 2004. It took 4.5 years to get that many users. And it took music streaming app Spotify10 years to reach that level. 

Exponential progress is giving life to AI, advanced robotics, autonomous vehicles, personalized medicine, and new forms of space travel. 

And it’s leading to outsized stock market returns for folks who know what’s going on. 

Leading AI chipmaker Nvidia Corp. (NVDA) just hit a new all-time high. It’s now up about 850% since the start of last year. And it’s worth $3.4 trillion. That makes it the second-largest company in America by market cap after Apple Inc. (AAPL). 

Or take the Robotics and Artificial Intelligence ETF (BOTZ). It’s one of my favorite ETFs for investing in exponential progress. And it’s knocking on the door of its 52-week high.

A break above $33 would be a convincing validation of the bullish investment case I’ve been making about robotics and AI. 

Of course, we’ve got to find ways to meet AI’s enormous power needs.  

Why Uranium Stocks Are Hitting All-Time Highs 

Training large AI models can require up to thousands of times more energy than typical computational tasks. 

Some sources estimate that data centers dedicated to AI consume up to 15 times more energy per operation than those handling traditional workloads. 

Nuclear energy fits the bill.  

It’s the only clean “baseload” power option that can function on a massive scale.  

Baseload power is the minimum continuous amount of electricity required to meet the basic demand of the grid. It’s needed to stabilize the grid. Without it, you risk blackouts and brownouts. 

This is why nuclear is enjoying an exponential technological progress-powered renaissance. And why the popular uranium stock fund, the Global X Uranium ETF (URA), has surged higher. 

And these trends are going to accelerate as AI continues to advance. 

When AI Goes Supernova 

The other day, somebody asked me what the next big thing would be for AI…  

They meant the next event or product or service that captures the eyeballs and clicks and dollars of hundreds of millions of people. The next big thing that will drive massive interest. 

I speculated that it would be a truly useful AI assistant. That would go supernova. 

We all know Siri and Alexa are pretty basic. They can play music on command. They can tell you the weather forecast. They can do some other semi-useful basic things. 

What most people want is for an AI app to hear something like “Get me a reservation for 4 at a great steakhouse within 15 minutes of my house for 6 p.m. on Saturday”… and then do it. 

We want it to be great at finding hotels… flights… useful answers to medical questions… legal questions… and products to buy. 

We want it to save us money, time, and frustration. 

I figure once Apple, Google, Meta, or another Magnificent Seven tech stock introduces a truly useful AI assistant, AI interest will go up to a whole new level. It will finally be something we all use most every day. 

Hypergrowth expert and InvestorPlace Senior Analyst Luke Lango agrees. He thinks it will be Apple Intelligence… which just started to roll out. 

Here’s Luke... 

Apple has so many customers and is such a high-profile company that it’s going to get high functioning AI into the hands of hundreds of millions of people.  

It will be on your laptop… your tablet… your phone… even your watch. You will see people using it at the office, on trains, on buses, in the airport, in restaurants. 

This will set off a tidal wave of demand for AI features and products from other companies… Plus set off a tidal wave of new demand for AI-related investments. 

If you think AI is a hyped-up phenomenon now, you haven’t seen anything yet. Chat GPT was the Big Bang for AI. Apple Intelligence will be the second Big Bang. 

Oh, and you may have noticed we have a highly polarized election coming up – one that will be fought over long after the last votes are cast.  

That’s only going to accelerate an Age of Chaos already in hyperdrive. 

That’s why Charles and Louis hosted their special pre-election broadcast last night. You can click here to access it.

They showed folks watching why election uncertainty could drag on for months… why this will cause stock market volatility to go through the roof… and the trading strategy you can use to turn this volatility into profits. 

They even be shared a trade you can make before the election to profit no matter who occupies the White House next. 

To life, liberty, and the pursuit of wealth in this Age of Chaos, 

Brian Hunt 

CEO, InvestorPlace

The post Chaos Chronicles: How to Survive on This Runaway Train  appeared first on InvestorPlace.

What’s driving those hefty gains? The tech giant’s excellent quarterly numbers, mostly powered by continued strength in AI.

In short, Alphabet is successfully leveraging artificial intelligence to improve the efficacy of its advertising business, the experience of its search engine, and the utility of its data centers. And its mastery therein is fueling ~15% revenue growth and ~30% profit growth. 

When it comes to AI, Alphabet is crushing it. And as a result, GOOGL stock is soaring higher. 

But we believe the biggest triumph reflected in Alphabet’s earnings report is actually the company’s most underrated AI driver: Waymo, its autonomous vehicle (AV) unit. 

Waymo was introduced to the public back in December 2016. And since then, the AV project has made substantial progress to cement itself as the world’s leading self-driving effort, even launching autonomous ride-hailing networks in places like San Francisco and Phoenix. 

But when it comes to privately owned self-driving vehicles, public-facing progress has been slow… 

Until recently. 

Over the past few months, the sands at Waymo have started to shift in a manner that we believe is consistent with exponential growth. 

That is, we think the company is gearing up to make 2025 the year that autonomous vehicles finally take over the roads. 

And Alphabet’s latest earnings report seems to support that thesis. 

Waymo Is Proving to Be Alphabet’s Golden Goose

This progress began in June, when Waymo removed the waitlist for its autonomous ride-hailing service in San Francisco, opening the service to all users. That signified a huge vote of confidence from management that its AVs are safe enough for everyone to ride. 

Since then, Waymo has greatly increased its fulfillment. The firm was previously completing about 50,000 autonomous rides per week. By August, that number had grown to 100,000. And now, as management confirmed in last night’s quarterly call, Waymo is completing about 150,000 rides per week. 

In other words, Waymo is currently growing its ride volume by about 50,000 per week every two months. At this pace, the company should be delivering over 200,000 rides per week by the end of the year. 

Not to mention, early next year, Waymo plans to expand its services to Atlanta and Austin, growing its footprint from three to five cities. 

And it won’t stop there. 

What makes us so sure?

Well, the company just raised $5.6 billion in a massive fundraising round. Plus, it recently announced that it will start testing its AVs on highways – an industry first. And it is also developing a new version of its AV platform that includes less cameras and less sensors in a roomier car. Presumably, this new AV – dubbed “generation 6” – will be much less expensive, much less clunky, and much more comfortable.

With all those new funds… all these new driving capabilities… and presumably cheaper cars… Waymo looks well-positioned to expand to multiple new metros over the next year. 

We think that’s exactly what will happen.

The Final Word

With this flood of recent developments, we believe Waymo will launch new autonomous ride-sharing services in multiple new cities next year – maybe even in a city near you. 

And we believe that will mark a watershed moment for the AV industry – the moment that AVs really hit the mainstream. 

It should also be the moment that AV stocks really start to soar on Wall Street. 

Of course, GOOGL stock should benefit from the coming AV Boom. After all, Alphabet does own Waymo. 

But in our view, GOOGL stock is far from the best way to invest in the AV Boom. 

We’re looking at other self-driving startups and analyzing their supply chains, too. We want to find the companies making the sensors for autonomous vehicles, working on the AI software, and developing the chips. 

The AV supply chain is complex. And we’re looking for the best stocks to buy therein before the AV Boom kicks off next year.

And when we find them, we’ll be sure to issue Buy Alerts across our research services.  

Leverage that extensive research today to rake in stock gains tomorrow.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Alphabet Earnings: Waymo’s Growth Sets GOOGL Stock on Fire appeared first on InvestorPlace.

• How do you prepare for election market volatility when we don’t know the winner?
• Would Trump or Harris be better for your portfolio?
• When will the house of cards of our national debt and fiscal deficit finally collapse?
• Is inflation truly conquered?
• How are Charles and Louis planning to trade the election?

These are just some of the questions that Charles Sizemore, CIO of The Freeport Society, addresses in today’s special video interview (link below).

If you didn’t get a chance to watch yesterday, it’s part of the run-up to last night’s “Day-After Summit” with Charles and legendary investor �������°�.

That’s the question at the heart of tonight’s event. But there are many important, related tangents. In my video interview with Charles below, we tackle some of those related issues.

From how to put election volatility on your side… to why the purchasing power of the dollar is in danger regardless of who wins… to whether “this time is different” for heightened emotions surrounding the election…

We tackle many different angles that investors need consider before next Tuesday.

To watch a replay of last night’s event, simply click here.

Enough introduction. Press “play” below to jump straight to the interview.

Again, here’s the replay of Charles’ and Louis’ conversation.

Have a good evening,

Jeff Remsburg

The post Election 2024: Brace for Impact appeared first on InvestorPlace.

Now, I am out with an even bigger call… about how chaos is going to grip the nation – and the stock market – in the days and weeks following the presidential election. That’s why Charles and I are putting together “The Day-After Summit” just days before that chaos hits, tonight at 7 p.m. Eastern Time. Click here now to automatically reserve your spot. Now, read on for more from Charles on our prediction… why you can’t let the chaos scare you… and how you can profit from it.

“Dalio Warns of Risk That US Election Result Will Be Disputed”

– Bloomberg

Thanks, Captain Obvious.

Ray Dalio is the founder of Bridgewater Associates, the world’s largest hedge fund.

He’s widely regarded in mainstream circles as second only to Warren Buffett in terms of investing acumen.

And last week, he made headlines for predicting that the U.S. presidential election would be disputed.

Gee, ya think?

While we’re making bold predictions, I one of my own…

The sun will set in the West tonight!

Not to insult Mr. Dalio, but of course the election will be disputed. It would be ludicrous to suggest otherwise.

And this isn’t just a Donald Trump thing. Kamala Harris intends to dispute the results if she loses as well because her opponent is a “threat to America,” as she says.

This year’s election will drag on for weeks… maybe even months.

And it will likely only conclude with a Supreme Court ruling sometime between Election Day on November 5 and inauguration day on January 20.

That means not only political and social strife… but also stock market chaos.

So as an investor… you better hold on to your hat.

The kind of volatility �������°� and I are predicting will outstrip anything we’ve seen in years.

But here’s the thing…

While the coming chaos will roil long-term portfolios, it also presents a rare chance to make outsized gains. You just need to be a nimble investor.

I’ll show you how today.

I’ll also show you how you can join me and Louis in a special pre-election event about how you can position yourself to profit.

First, though, let me state something else that’s blindingly obvious…

Red, White, and Anxious

This election is bad for our collective mental health. 

Take the new Forbes Health survey of 2,000 U.S. adults.

�������°� 6 in 10 respondents said their mental health had either been “slightly, moderately, or significantly negatively impacted” by the upcoming election.

Most folks reported feelings of anxiety and stress. 

�������°� 1 in 3 said they were experiencing feelings of outright fear.

I get that…

We’ve never had an election this close… or this important.

Nor have we ever had an election in which one candidate was swapped out in the final months… and the other candidate had multiple ongoing criminal cases.

Both candidates are accusing each other of trying to steal the election.

There’s already been two assassination attempts.

It would be weird if Americans didn’t feel anxious.

That includes investors. And when investors are fearful, volatility spikes.

It’s why most wealthy investors have plans to move their money before next week, according to Swiss investment banking giant UBS.

These folks know a market storm is brewing, and they’re preparing ahead of time.

That’s what we need to do, too.

Because bouts of volatility like the one that’s coming are great news for folks with the right trading plan.

Turn Chaos Into Outsized Profits

InvestorPlace CEO Brian Hunt wrote about it in the Age of Chaos book he’s shared with many of you…

Times of extreme volatility, like the 2007-08 financial crisis, the 2000-02 dot-com crash, and the 2020 COVID-19 crisis, are like the Super Bowl for short-term traders.

During those kinds of chaotic times, traders can make the equivalent of 12 years of profits in just 12 months. To great short-term traders, chaotic, volatile markets are times when the sky opens and starts raining gold.

You can build your whole career around these kinds of markets.

I know crashes and panics can be bad for a lot of people, but they create incredible trading opportunities.

The key here is “short term.” 

Brian again…

Volatile markets and times of crisis are great for traders because they create huge moves in the markets that play out over the short term.

A move that might play out over 12 months in a calm market can play out over 12 days in a fast-moving, volatile market.

In a calm market, you might see the stock market move 10% in 12 months.

In a volatile market, you can see the stock market move 10% in 12 days.

Instead of seeing the price of crude oil change by 20% over two years, a volatile market can create a move of that size in two months.

Clearly, the rest of 2024 is setting up to be the most tumultuous and chaotic time for investors since the COVID-19 crash.

At many times over the coming weeks, we’ll feel like we’ve entered a bewildering, nonsensical Alice in Wonderland world.

And we’ll see astonishing levels of stock market volatility.

That’s good!

And it’s why Louis and I have prepared a strategy that will equip you to emerge from it a winner.

No. 1 Tool for Turning Volatility Into Gains

We’ll be getting into full details of that during our broadcast tonight at 7 p.m. ET.

But I can say a few things here…

First, it’s got nothing to do with what we think will happen next to stocks.

The strategy we’re using to profit from the post-election chaos is a purely quantitative one.

It doesn’t rely on feelings, hunches, or forecasts about stocks that are set to soar. Instead, it tracks massive money flows into stocks from deep-pocketed Wall Street investors.

The bigger the money flows into a stock, the more confidence we have that a stock is about to move higher.

How good is this system?

Going back to 1990, the trades it’s flagged in back-tests have beaten the S&P 500 by as much as 6-to-1.

And over the past three decades, it’s flagged more than 3,500 stocks that have gone on to soar 1,000% or higher.

In fact, I consider it the No. 1 tool for anyone looking to turn uncertain times into big gains.

It’s a simple, systematized way to achieve market-beating returns when the market is gyrating. And if you want to navigate this market successfully, a systematic approach will be critical in the coming weeks.

Nobody knows that better than Louis. As most of you are aware, he’s an icon on Wall Street for his pioneering work in quantitative analysis.

He began publishing his quantitative analysis on growth stocks back in 1980. Seven years later, he started managing private accounts for high-net-worth individuals at his Navellier money management firm.

And he continues to use his proprietary quant system to help identify growth stocks and market trends. That’s how he spotted early investments in companies that dominated their industries, including Microsoft Corp. (MSFT) at $0.38, Apple Inc. (APPL) at $0.37, and Nvidia Corp. (NVDA) at less than a quarter.

Of course, that’s “ancient history.” But just in the past year, Louis has closed out trades in:

• Rambus (RMBS) for 133% gains in 17 months.
• Super Micro Computer (SMCI) for a 593% gain in a one-third sale.
• Gatos Silver (GATO) for 45.6% gains in one month.
• And e.l.f. Beauty (ELF) for 68.5% gains in 16 months.

That’s why I’m delighted that he will be hosting our event next Tuesday – which we’re calling The Day-After Summit.

I can’t think of anyone who’s better qualified to talk about how quantitative strategies can turn volatility into profits.

The interest list for that event is now open. To secure your spot so you can prepare before the fireworks start, go here now.

And keep an eye out for more on what’s coming on November 6… and how you can prepare.

To life, liberty, and the pursuit of wealth,

Charles Sizemore

Chief Investment Strategist, The Freeport Society

P.S. I know your time is valuable… but I hope you’ll clear some time in your schedule tonight around 7 p.m. Eastern to hear what Louis and I have to say about the period of extreme market chaos that’s coming.

Millions of Americans risk getting into trouble as markets whipsaw. I don’t want you to be one of them.

And in addition to showing you the best way to navigate the chaos, we’ll be sharing a post-election trade – for free – with everyone who attends. It’s designed to pay off no matter who wins the election.

Here’s that link again to immediately secure your spot.

The post Market Chaos Is �������°� to Hit – Are You Ready? appeared first on InvestorPlace.