Bill Gates on where AI is going … a “free intelligence” economy … more uncertainty from Trump’s auto tariffs … checking in on the U.S. consumer How will AI impact your day-to-day life in the near future? Last month, Microsoft founder Bill Gates was a guest on The Tonight Show with Jimmy Fallon. When asked about the future of artificial intelligence, Gates responded: [Today,] intelligence is rare – you know, a great doctor, a great teacher. With AI, over the next decade, that will become free, commonplace. Great medical advice, great tutoring. And it’s kind of profound because it solves all these specific problems… But it brings with it so much change. What will jobs be like? Should we just work, like, two or three days a week? I think it’s a little bit unknown. Will we be able to shape it? And so, legitimately, people are like, “wow, this is a bit scary.” Fallon responded, “Will we still need humans? Gates’ response? Not for most things. It’s critical that we see the big picture Our last two Digests have dug into various aspects of the coming age of AI in the run-up to this morning’s roundtable discussion with experts Louis Navellier, Eric Fry, and Luke Lango. During this fantastic, eye-opening conversation, our experts detailed how AI is exploding the “Technochasm.” This is Eric’s term to describe the stark – and expanding – wealth gap in the United States that has been driven by technology. They also named a handful of stocks they believe will benefit from this massive, AI-related wealth shift (You can catch a free replay right here). Returning to Bill Gates, to flesh out his “humans won’t be necessary” point, here’s Harvard Magazine, reporting on another interview Gates conducted recently at his alma mater: Unlike the first PCs, which merely amplified human capabilities, AI has the potential to replace them. Gates pointed out the existential shift: “Intelligence will be completely free.” What does that mean? Computing was once about making existing tasks more efficient, he explained, but AI could fundamentally redefine what tasks humans delegate to people or to machines. Now, if humans won’t be necessary “for most things,” and intelligence will be “completely free,” then what will be our source of economic value? In other words, how will Americans earn a paycheck? Is an AI utopian future achievable? Some readers may already be pushing back: Jeff, you’re missing the point. Personal economic value won’t be necessary. AI will create, do, and achieve everything for us, so no paychecks will be needed. Even if that’s true, let’s not overlook something… That utopian scenario exists on the other side of an incredibly messy transition period. Think about that chaotic “in between” where a tiny fraction of people controls AI, reaping enormous financial rewards at the expense of the majority that AI has rendered economically unnecessary. Even if AI’s eventual outcome is utopian, we could experience enormous social/economic turbulence before we achieve it through government legislation or whatever means it arrives. “Heaven” for those who own AI… “Hell” for everyone else. If so, then one of the best (and potentially, only) protective steps we can take today is to align our wealth with AI. After all, if you and I lose our livelihoods to AI as we transition to Gates’ “free intelligence” future, then investing in the technology that will replace us appears to be a critical economic protectant. This morning, Louis, Eric, and Luke mapped out what they’re doing from an investment perspective, providing a blueprint for how to benefit from the “chaotic in between” rather than be victimized by it. You can check it out right here. We’ll continue updating you as this Technochasm widens. | Recommended Link | | | | When he recommended Microsoft at 38 cents… Google in 2005… and Nvidia before AI was mainstream, people called him crazy. Now they’re calling him crazy again about this overlooked tech stock that he says could be “The Next Nvidia”. Click here to see the name and ticker symbol. |  | | “Uncertainty” continues to weigh on the economy and the investment markets In recent Digests, we’ve highlighted how uncertainty is a massive headwind today. The question marks relate to many things: President Trump’s tariff plans, inflation’s upcoming direction, the Fed’s interest rate policy, and whether consumer spending can hold up, to name a few. Trump added to the uncertainty yesterday. On Wednesday, he said that tariffs would be “very lenient,” even suggesting that tariffs on China could drop to further a deal for TikTok. But last night, he announced a 25% tariff on all imported cars and car parts. Here’s The New York Times: The tariffs will go into effect on April 3 and apply both to finished cars and trucks that are shipped into the United States and to imported parts that are assembled into cars at American auto plants. Those tariffs will hit foreign brands as well as American ones, like Ford Motor and General Motors, which build some of their vehicles in Canada or Mexico. Nearly half of all vehicles sold in the United States are imported, as well as nearly 60 percent of the parts in vehicles assembled in the United States. That means the tariffs could push up car prices significantly when inflation has already made cars and trucks more expensive for American consumers. We’re seeing increasing evidence that “uncertainty” is weighing on economic activity. For more, let’s go to legendary investor Louis Navellier and his Growth Investor Flash Alert yesterday. Here he is highlighting recent economic data pointing toward an uncertain consumer: The economic news has not been good this week. The Conference Board consumer confidence survey dropped for the fourth month in a row, and the drop was huge. It went from 101.1 in February to 92.9 in March. Economists were expecting 94.5, it was a huge disappointment. The expectations component in the Conference Board’s consumer confidence index is now at its lowest level in 12 years. The present situation component also declined. So, that means that consumers are not very certain on anything, and so that’s dangerous. We have to keep an eye on this. If I was on the Federal Reserve Board, I’d cut interest rates right now just based on that report. Now, it’s not all bad news. Louis points out that Trump’s tariffs are having some desirable effects: A good example is Vietnam, [which] has the third largest trade deficit with America. Based on the fear that Trump’s going to impose tariffs on them, Vietnam has cut its tariffs on vehicles, liquefied natural gas (LNG), ethanol and various agricultural goods. Furthermore, Vietnam has tried to placate the Trump administration by not having any limit on U.S. imports. So, this is going to be happening with all the countries. They’re all going to be trying to adjust things. Despite the progress, Louis and I share the same opinion on tariffs: Let’s use them briefly, effectively, and then get back to free trade. Here’s Louis: Hopefully, after [President Trump’s] “Liberation Day,” April 2, when the tariffs are put on, all the uncertainty diminishes. In a perfect world, we would have free and fair trade with no tariffs. So, let’s get this Liberation Day over with so all the uncertainty disappears. And let’s go onward and upward. Circling back to the consumer, keep your eyes on a few new developments… Data on the U.S. consumer is mixed. Let’s ping-pong our way through some recent headlines. On student loan defaults, here’s the latest from CNBC yesterday: Around 9.7 million student loan borrowers became past due on their bills after the Covid-era payment pause expired, according to a new estimate by the Federal Reserve Bank of New York… The New York Fed estimates that the volume of past-due federal student loans hit 15.6%, with more than $250 billion in delinquent debt. Meanwhile, though our overall unemployment number remains relatively low and stable, there are issues to watch. Here’s hiring placement service Challenger, Gray, & Christmas from earlier this month: U.S.-based employers announced 172,017 job cuts in February, the highest total for the month since 2009 when 186,350 job cuts were recorded… February’s total is a 245% increase from the 49,795 cuts announced one month prior. It is a 103% increase from the 84,638 cuts announced in the same month last year. Now, much of this is related to DOGE’s federal job cuts. So, while we feel for the federal workers who have lost their jobs, these losses don’t necessarily represent a wider trend in the overall labor market. Plus, there is some good news out of the report… Though Federal Reserve Chairman Jerome Powell referred to our labor market as “low hire, low fire,” the Challenger, Gray, & Christmas report suggests robust hiring is on the horizon: Companies’ hiring plans surged in February to 34,580. So far this year, companies plan to hire 40,669 workers, an increase of 159% from the 15,693 hiring plans announced during the same period last year. But even for people who have jobs, a recent report from Bank of America Institute finds that nearly half of Americans believe they are living from paycheck to paycheck. Now, the article explains that the definition of “paycheck to paycheck” is vague. Some Americans might use the term despite putting money into savings accounts (because they see zero disposable dollars left over at the end of the month). So, let’s ignore those specifics and focus on the broader trend. Here’s USA Today: In the Bank of America surveys, the share of consumers who said they lived from paycheck to paycheck has gradually risen, from about 35% in early 2022 to 47% in the third quarter of 2024. Let’s end today by coming full circle to AI and the Technochasm-fueled wealth gap Regular Digest readers are familiar with our “K”-shaped economy. The “haves” at the top end of the “K” have done very well over the last several years as their assets have risen ride atop inflation. However, “have nots” at the lower end of the “K” have been stretched financially as inflation has eroded the purchasing power of family budgets. Here’s Bloomberg with the latest data on this “haves” and “have nots” divide: The richest half of American families owned about 97.5% of national wealth as of the end of 2024, while the bottom half held 2.5%, according to the latest numbers from the Federal Reserve. For as lopsided as this is, AI and the Technochasm will only exacerbate it…at least during the “chaotic in between.” We’ll keep you updated on all these stories here in the Digest. Have a good evening, Jeff Remsburg | 
In Today’s Masters in Trading: Live – November 25, 2024
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