The Economy *JUST* Flipped | NEW Rate HIKES Coming

GDP and Jobless Claims Beat Expectations

In this section, the speaker discusses the latest GDP and jobless claims data that have just been released.

Better-Than-Expected Economic Data

• The latest GDP figures show a growth of 1.3%, beating expectations of 1.1%.

• Initial jobless claims came in at 229, lower than the expected 245.

• Personal consumption increased by 3.8%, beating expectations of 3.7%.

Implications for the Economy

• The strong economic data suggests that inflation may be slightly sticky but not stagflation.

• This could potentially lead to the stock market or the FED taking action to prevent an unsustainable rally.

AI and Job Growth

In this section, the speaker discusses how AI could potentially lead to job growth rather than loss.

Initial Jobless Claims Revision

• Initial jobless claims were revised down from last week's figure of 242 to 225.

• Continuing claims also came in lower than expected, indicating that companies are hiring more people.

Thesis on Job Growth with AI

• The speaker proposes a thesis on how AI could actually lead to job growth instead of loss.

• Companies are currently focused on making money with AI, which could drive them to hire more engineers and create new startups.

Investing in Hardware vs Software

• Investing in hardware like Nvidia may be more profitable as most startups will focus on creating software using AI rather than developing better server chips.

The Importance of Hardware in AI Startups

In this section, the speaker discusses the importance of hardware in AI startups and how it is necessary for training artificial intelligence models.

Hardware is Essential for AI Startups

• All AI startups will need to train their models, test them, operate with them, and provide them to consumers.

• Every query with these startups will go through server chips.

• Even if 98% of these startups fail, 100% of their AI effort will go through hardware.

The Speaker's Views on Software vs. Hardware

• The speaker believes that software is scary and that people should focus on chips instead.

• He encourages people to invest in chips rather than software.

Inflation Reading and GDP Pricing Pressure Numbers

This section covers the speaker's thoughts on inflation readings and GDP pricing pressure numbers.

Importance of Next Inflation Reading

• The next inflation reading will be released on June 13th.

• It is about two weeks after the initial lectures on AI in the "How to Make More Money and Get Sh9t Done Faster" course are released.

• The speaker believes that this next inflation reading is more important than quarter over quarter numbers for GDP pricing pressure.

Thoughts on Inflation Lasting Longer

• The speaker is not terribly worried about inflation lasting longer because he thinks the market has already accepted it.

• When core GDP prices paid numbers tick up a little bit, it may make people scratch their heads a little bit.

Market Acceptance of Inflation Lasting Longer

This section covers the market's acceptance of inflation lasting longer.

Market Rising Despite Unpricing Fed Cuts

• Despite unpricing fed cuts, the market has been rising.

• The speaker believes that the market is relatively accepting of inflation lasting longer.

Rate Cut Curve

• The speaker pulls up the rate cut curve to show that the implied overnight rates are reducing their expectations for rate cuts.

• He notes that this is quite remarkable because the market has been rising at the same time.

Fed Terminal Rate Expectation

This section covers the Fed terminal rate expectation and how it affects rate hikes.

Fed Terminal Rate Expectation

• The current fed funds rate terminal rate expectation has been 5% to 5.25%.

• This is conducive with a pause.

• However, the market is starting to price in one more rate hike due to strong data and a banking crisis that doesn't seem to be hurting GDP.

• AI could potentially give more rate hikes if it creates hiring and GDP booms.

Implied Overnight Rates Pricing In Another Hike

• The implied overnight rates have started pricing in another hike by July.

• There may be a cut by September back to where we are now, making this flat in theory.

• The market is still expecting about 1.7 cuts by January 31st, 2024.

Future of Computing Power

This section covers the future of computing power and how chips will become commoditized.

Future of Chips

• In the long-term future, chips will become commoditized like CPUs.

• People will look at chips as garbage and basic, unable to make money off of them.

• GPUs are relatively dirt cheap for CPUs.

TSM and Nvidia's Orderings

The PEG ratio for TSM was high, but due to Nvidia's orderings, it has decreased.

Impact of Nvidia's Orderings on TSM

• TSM is the provider of shovels to AI.

• The PEG ratio for TSM was high.

• Due to Nvidia's orderings, the PEG ratio for TSM has decreased.

Best Buy Earnings Report

Best Buy reported better than expected earnings with weaker revenues.

Best Buy Earnings Report Details

• Best Buy reported earnings of $1.15 per share.

• Revenues were weaker at $9.47 billion compared to estimates of $9.43 billion.

• Total comparable sales were down 10.1% as expected.

• Digital sales in the US were down 12.1%.

• The company reaffirmed its full-year guidance but expects to hit the midpoint of this range.

• Weaker categories at Best Buy include computing appliances, home theater and mobile phones while gaming and services were stronger.

GDP Numbers and Gold Prices

The GDP numbers are impressive and have caused gold prices to decrease.

GDP Numbers Impact on Gold Prices

• The annualized quarter-over-quarter GDP growth rate is 1.3%, which is low but still better than going into a recession.

• There is no indication yet that there will be a recession.

• If AI bails everyone out of the recession, Jerome Powell will go down as a hero instead of AI saving him.

• Gold prices went up because everyone thought there would be a recession, but they have now gone down due to the impressive GDP numbers.

U.S. Data Prints

The U.S. economy is growing faster with lower jobless gain claims and higher inflation than expected.

U.S. Data Prints Details

• Thursday's data isn't going to help put short-term rates back in their box.

• Initial claims printed well below expectations, and the prior week was revised down.

• The warning signal from the weekly figure has slackened in intensity, particularly with the rise in consumer continuing claims also leveling off.

• Real GDP growth was revised up from 1.1% to 1.3%.

• Inflation measures both Total deflator and core deflator were unexpectedly nudged higher.

• The trajectory for both prices and nominal GDP is not consistent with second-half rate cuts.

• These data will keep 2023 rate cut expectations shrinking but the stock market is rising.

Investing in Stocks

In this section, the speaker talks about his investments in stocks and how he deals with making decisions.

Making Investment Decisions

• The speaker admits that not all of his investment decisions are perfect.

• He advises against dwelling on past mistakes and letting them affect one's mental health.

• The speaker emphasizes the importance of accepting that some things are unpredictable and uncontrollable.

• He compares investing to playing Russian roulette, where it is impossible to know what will happen.

Balancing Risk and Reward

• The speaker discusses the question of whether to invest in big banks or high-growth companies like Nvidia.

• He explains that he believes we are currently in a Nike Swoosh-style recovery, where high-growth companies will perform well.

• The speaker acknowledges that there is potential risk involved with investing in high-growth companies like Nvidia, but argues that the potential reward outweighs it.

• He notes that artificial intelligence could lead to massive growth for chip companies over the next decade.

Government Regulation and Investment Opportunities

In this section, the speaker discusses government regulation and its impact on investment opportunities.

Investing in Banks vs. Chip Companies

• The speaker weighs the pros and cons of investing in big banks versus chip companies like Nvidia.

• He notes that while there may be some argument for investing in banks due to their stability, he believes chip companies offer higher growth potential.

• The speaker explains that artificial intelligence could lead to a 20% increase in global GDP over the next decade, making chip companies an attractive investment opportunity.

This transcript has limited content and does not provide a comprehensive overview of investing. It is important to conduct thorough research and seek professional advice before making any investment decisions.

The Future of Technology

In this section, the speaker talks about his belief in the future of technology and why he is a big fan of chips.

The Future of Technology

• The speaker believes that the future lies in robotics, energy, and autonomy.

• He mentions that it can be difficult to pick software companies to invest in but he is excited about Nvidia's growth potential.

• Tesla has been left behind in terms of stock performance due to political hate towards Elon Musk and high interest rates making it difficult to sell cars.

• Server chips are easier to sell as they are already being used by companies for capex spending.

• The speaker encourages viewers to check out their programs on building wealth through fundamental analysis on stocks and real estate. They cover earnings calls and inflation in detail.

• Time is what will make money when it comes to AI, according to the speaker.

Final Thoughts

In this section, the speaker wraps up his thoughts on technology and investing.

Final Thoughts

• The speaker emphasizes the importance of time when it comes to investing in AI.

• He encourages viewers to stay informed about market trends and news related to their investments.

• Finally, he thanks viewers for watching and invites them to join their community for more investment insights.