Where the market is going now

Louis Navellier’s roadmap for the next two months… job loss expectations… AI VC failures… how to ‘protect’ your AI portfolio

Let’s start today with legendary investor Louis Navellier and his roadmap for where the market is headed as we head into the fall.

From Louis’ Flash Alert in Growing Investor:

Nvidia will announce on the 28th. I expect the guidance to be phenomenal.

We’ll get the personal consumption expenditure report on the 30th. I expect it to be very favorable, showing inflation rising a tenth of a percent or less, so we’re in the Fed’s target range.

So these should be positive developments for the market.

We tend to gather on holiday weekends like Labor Day. And then the market will probably have to hit the “pause” button. We will stop for a few days and consolidate.

Then we have the presidential debate on September 10th. And we’ll certainly have a better idea of ​​who the leading candidate might be after that debate.

Then we have to pay our quarterly taxes on September 15th. That’s why the market is often soft, because people are selling stocks to pay their taxes.

And then, of course, we’ll have the Fed interest rate on September 18th and a dovish FOMC statement. And we’ll get a new Dot Plot, which will forecast FOMC members’ rate cuts for the rest of the year and next year as well.

So a lot of positive things are about to happen.

Now, despite this bullish forecast, Louis points out that the market has become overbought because it went up so quickly. So he tells his listeners to expect oscillations – it won’t be a straight line up.

That said, the bottom line is that Louis is very optimistic as he looks ahead to the fall.

Hot spots to keep an eye on in the market

Last Friday, Federal Reserve Chairman Jerome Powell signaled that a new rate cut cycle had arrived. Behind this decision are two influences: 1) Powell’s confidence that inflation is finally on a sustainable path to 2% and 2) Powell’s concern about the accelerating cooling in the labor market.

The labor market is the number one “hot spot”.

As I detailed in Digest Last week, not only did the unemployment rate rise faster than the Fed wants and previously predicted, but our economy has been swapping full-time for part-time jobs at a rapid pace.

With that background, last week we learned that the largest number of US workers in history believe they are on the verge of losing their jobs.

from The Kobeissi letter:

The share of people who believe they will remain unemployed in the next 4 months increased to 4.4%, the highest recorded.

That’s a significant increase from the 2.8% rate seen in March 2024, according to the NY Fed’s jobs situation and outlook survey.

At the same time, the share of workers who reported looking for a job in the past 4 weeks rose to 28.4%, the highest since the survey began in 2014. It also rose 9 percentage points from 19.4% registered in July 2023.

More proof that the labor market is weakening.

Source: Kobeissi Letter / Bloomberg / Data Fed

If we look at the venture capital market – hot spot number two – we see a similar weakening

Last week, we learned that US start-up failures have increased by 60% in the past year.

What is more telling is the speed with which these new ventures fail. The Financial Times notes that 254 startups disappeared in the first quarter of 2024, which is more than seven times more than in 2019. The article goes on to say that millions of jobs in these start-ups are at risk, “risking a slide into the broader economy. “

Now, while we could continue to research why VCs fail or discuss the likely positive impact of future rate cuts, there is a more interesting angle. And it ties into the hottest investment trend on the market today…

The growing link between VC and AI failures

Venture capital failures fit into the current AI trend.

For more on this, let’s go to PYMNTS.com:

The funding slowdown leads to a wave of failures, leaving outside venture capitalists to look in. This trend threatens other startups trying to develop their own big AI language models and raises concerns that VCs can’t compete with Big Tech companies for investment.

The European Business Review argues that the next wave of AI launch failures is a natural part of the technology’s evolution, paving the way for innovation and paving the way for widespread adoption…

But it’s not just venture capital firms that are struggling to find their way with AI. As I detailed here, in DigestAI itself is not yet profitable. Yes, AI-enabling companies—like Nvidia—are reaping the benefits, but most AI implementers today are spending a fortune without certainty of financial return.

Back to PYMNTS.com:

PYMNTS Intelligence research shows that despite big budgets and ambitions, most large companies struggle to use AI in meaningful ways, with a significant gap between the perceived potential of AI and its actual application in the corporate world.

With these realities of AI investing in mind, last week’s AGI event with Eric Fry is even more important…

Is the best AGI investment an anti-AGI investment?

Last Thursday, Eric hosted The road to the AGI Summit. And while the event focused on investing in AGI (Artificial General Intelligence), some of the action steps probably aren’t what you’d expect.

Here’s Eric to start unpacking this:

The biggest gains in the next few years may come from direct investment in AI technologies. However, as AI matures, it will continuously create and then destroy technology-centric businesses. A technology that facilitates early AI, for example, could become a victim of advanced AGI.

Instead, one of the best ways to invest in the eventuality of AGI is to get into industries or assets that AI could never replace.

No matter how smart AI gets, it will never turn into a forest. It will never sprout into a lemon tree, nor will it turn into an ocean freighter, platinum ingot, espresso bean, or stretch of sandy beach.

An example of this potential destruction of AGI technology is Adobe. This software leader makes products that help digital designers.

For part of the foreseeable future, AI advances should help Adobe create stunning products for its designer customers, which we would expect to increase revenue. But what happens when AI grows so advanced that we no longer need digital designers? Instead, you’ll tell an AI digital design robot what you want.

Well, in this case, without a drastic pivot, Adobe’s entire business model goes “fluff.”

If you think this is cause for fear, Adobe employees are the ones who voiced this concern

Here’s last month’s Benzinga:

Adobe employees are concerned that the company’s AI technology is putting its customers’ jobs at risk. Not only that, Adobe staff are also concerned that this may disrupt the company’s business model, much of which caters to graphic designers.