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Dear Reader,
In 2023, stock pickers have crowded into one trend and one trend only...
Artificial intelligence. AI.
There's certainly good reason: AI has the power to reshape entire industries, fuel dramatic upticks in profitability, reduce overhead costs (like labor <gulp!>), and fuel huge momentum moves that drive stocks higher.
But let's bear in mind humans aren't beaten yet. And there are two very specific sectors that too many investors appear to be ignoring right now.
Let's dive into those...
The Market's Ultimate "Power Couple"
While the financialization of this economy continues to fuel big investments in large, unprofitable companies based on the hope of technological advancement... the rest of the world is cornering the markets on food and energy. In fact, they're building entire coalitions around these sectors.
AI can't replace physical assets like food, housing, energy, and other tangible goods. And while AI will be deflationary, the price of these physical goods tends to rise (in dollar terms) over time due to central bank activity in pouring more money into the system.
These are the two pillars of human existence. I hate to remind people - while AI could be revolutionary, it's not going to run at mass capacity on the sun any time soon. And it can't rely on wind. The large industrial centers that will reportedly build the future - will likely rely on supply chains that operate on diesel and natural gas. But that transition will certainly accelerate with time. That's why it's perplexing that lithium prices continue to decline - after all, we'll need to 10x production in the decade ahead to have any chance of success.
Meanwhile, I think it's pretty obvious food demand is only rising. And with governments looking to alter farming practices, things could get dicier in the future for a planet with 8 billion people on it. Right now, we're seeing great companies with strong financial discipline, which literally feed the planet, declining due to concerns about a recession.
But that decline is a buying opportunity - one we're not likely to see again as population and food demand climb. I look for these companies to be resilient. Don't chase a trend - and remember to diversify in the things that matter... and the things we need. Real assets have real value.
Today's Momentum Reading
WORLD'S BIGGEST INDICATORS
Recap: The World's Biggest Indicator (Momentum) is Red...
Today, There was a massive reversal on the S&P 500 and SPY at 10 AM. This isn't surprising as there is a total lack of a trend to this market. We just saw a big pop on the $411 call from the lows of $0.72 to now $1.20 at 10:30. That was a 30-minute move. It's incredible how this market completely lacks a trend.
Flashpoint I'm Watching
Debt Bluff: The debt ceiling is a total bluff. The U.S. government won't run out of money on June 1. The so-called "X date" comes later in the year. What's craz…
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.