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☕ The biggest names in AI are buying

Mar 07, 2024

Good morning! 👋

I hope this email finds you well... let’s get to it!

The S&P 500 has just 0.6% to go if it wants to end in positive territory, the Dow has about 1% to make up, and the NASDAQ has only 1.5% to catch up.

Will it?

Too early to say, but you’d better be ready.

Here’s my playbook.

1 – JPow finally lays it out

I have been as emphatic as I have been consistent.

He would hike or hold rates in Q1 before ultimately getting benched in Q2 at which point the markets will take off like a rocket with the bulk of gains coming in the latter half of the year.

Many investors think they’re gonna wait for confirmation or that there will be some sort of signal flag but that’s a mistake.

You get to the bus stop early if you want a good seat.

Same with stocks.

Big tech, especially.

Keith Investing Tip: Missing opportunity is always more expensive than trying to avoid risks you can’t control.

2 – Microsoft’s AI whistleblower

A Microsoft AI engineer is making headlines because he says that the company’s AI image creator, Copilot Design, often produces content that is sexual or violent in nature. What’s more, the images could infringe upon copyright law. (Read)

Here’s the thing.

Contrary to what the headlines will make you think, the problem isn’t AI.

It’s the humans who programmed it.

AI runs on algorithms that humans design. If programmers prioritize patterns or features present in violent, sexist, or otherwise deviant behavior, guess what’ll show up?

There will be considerable debate about ethical “guard rails” in the years ahead but that’s really a smokescreen. The real issue may come down to developers who prioritize performance and efficiency over morality which inadvertently encourages AI to create appalling outcomes.

It's yet another area where technology has charged ahead faster than the legal system which, not for nothing, still must contend with gun violence, child pornography and dozens of other nasties.

Microsoft will get a handle on this fairly quickly.

3 – Regional banking supervisory risk is so high it makes Boeing execs look good

I can’t remember which anchor asked me about it during the height of the regional banking mayhem, but would I buy NYCB?

No way.

Still won’t.

Regional banks face a triple whammy coming from a) rising depository retention costs, b) pressure to write down commercial real estate loans (because vacancy rates remain high) and c) supervisory problems so bad they make Boeing’s execs look like they have their act together.

Investing idea: Buy a big bank you like, trust, and want to own forever.

Trading idea: Buy puts or at least avoid anything smaller.

4 – Say it ain’t so... why the sudden EV pushback

The administration is hellbent on EVs but, suddenly and for no apparent reason, there’s been an about face from dang near every element of the manufacturing chain. Even Energy Secretary Jennifer Granholm is worried. (Read)

Why?

I’d be willing to bet that our government has very quietly – and finally – recognized what we’ve been discussing for several years now.

Chinese EVs are a massive national security risk so the US better double down on dinosaur juice while we still can.

Not only can Chinese EVs collect information about drivers that will be undoubtedly be sent back to China, but infrastructure, too. Imagine, for example, autonomous Chinese cars driving down the road while cataloguing every major bridge, tunnel, and airport for military action.

Or, what happens to our manufacturing base when Chinese makers flood the market with well designed, technically capable offerings that are 1/3rd of Detroit’s cost. And lest you think I’m kidding, Chinese car makers can field new models 3-5X faster than Western competitors.

Imho, there are only three Western makers capable of competing at scale: Tesla, Ford and potentially Stellantis which is partnering with LeapMotor, a Chinese maker to – you guessed it - sell LeapMotor products outside China. (Read) Toyota could fit the bill if it gets a whole lot more serious about fuel cells.

My guess is that more than a few people reading along are going to cringe.

I get it.

Just keep in mind that China exported 5M vehicles in 2023 and, in doing so, is now the largest car exporter having dethroned Japan. Oops.

MyPOV: The day is coming when you will own a Chinese EV (and love it) even though you may hate the thought today.

Speaking of which, I recommend two of the very best in One Bar Ahead® and both are upside down something fierce at the moment. No matter – breakthrough companies often endure long drawdowns while they gain footing. I also happen to think they’re both blue chips in the making so I can afford to be patient while I accumulate shares.

5 – The biggest names in AI are buying

Most investors have never heard of Figure AI, a humanoid robot maker.

You will.

The company has already apparently penned an agreement with BMW to provide general-purpose production robots. There will be more.

Wonder what the UAW is gonna say about that when the time comes!

But I digress.

The key takeaway here is that anybody with a manufacturing job, working in transportation or warehousing better take notice. And start learning new skills at once.

Humanoid robots are UII – Unstoppable, Inevitable, Imminent.

Meanwhile, Figure AI is still private so you can’t invest directly unless you participate in an upcoming funding round (assuming there is one).

There is a back door, though.

Microsoft, Nvidia, and Amazon are all on board with the company’s most recent funding round.