TL;DR
- AI is all of the headlines, from autonomous vehicles, to Tesla’s AI day and art and music creation engines
- Inflation figures for the month of August have been released, and they grew again
- There are a range of investments that can hold up well against inflation, and we’ve bundled them, into our Inflation Kit
- Top weekly and monthly trades
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Major events that could affect your portfolio
One of the biggest themes this week has been AI. And no, we’re not just saying that. We’ve obviously been in the AI game for a while and it has incredible benefits if the technology is used in the right way.
But beyond what we do, AI is having a moment right now and it could be the start of something big.
Google trends data for this week has been throwing up a huge number of AI related topics. A lot of this comes off the wave of AI applications that are creating everything from autonomous delivery vehicles to artwork and music.
We’re seeing applications of machine learning and neural networks from small startups all the way up to the largest companies on earth, and it’s not an exaggeration to suggest that AI is going to change the way the world operates.
Right now, some of the applications receiving the most headlines don’t necessarily have a clear business case behind them. Dall-E 2 is one of the most notable, which uses text prompts to create AI generated images that can be simply incredible.
The images are so good that one of the AI creations recently won first place at the Colorado State Fair digital arts competition. It’s fair to say that as time goes on, savvy entrepreneurs will find ways to pull value from this technology that goes beyond $300 art prizes.
On the other end of the spectrum, Tesla now devotes a special day of announcements to AI every year. Tesla’s AI Day is scheduled to take place on 30th September, and we’re going to be providing extensive coverage of the event and the implications for their latest technology.
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Inflation is a topic that won’t be going away any time soon, and the figures released this week show that so far, the Fed’s rate hikes haven’t been able to make much of a dent.
The data for August was released and showed that headline inflation had increased by 0.1% for the month, which was higher than analysts expectations. It was widely thought that inflation was likely to moderate through August, with most predictions at around 0.1%.
It means that headline inflation was 8.3% over the past 12 months, which is slightly down from the 8.5% it hit through July.
Core inflation was even worse. This data point removes food and energy from the calculation of rising prices, as these two sectors can be notoriously volatile. Not last month though, as core inflation soared 0.6% to hit 6.3% over the past 12 months.
This monthly increase was double what economists had been expecting.
The markets reacted swiftly as the numbers all but guarantee a chunky rate hike when the Fed meets next week. The day after the announcement was the worst single day for the S&P 500 since the beginning of the pandemic in 2020, with the index closing down 4.32%.
A 0.75 percentage point increase is all but priced in, with some analysts now suggesting a rate hike of a full 1.00 percentage points could be on the cards.
This week’s top theme from Q.ai
With inflation here to stay for at least a while yet and the Fed’s response likely to make markets nervous, it’s a tricky time for investors. There don’t appear to be any obvious investments right now, but one thing we do know is that anything that can hold up against inflation is going to be a good option to consider.
There are a number of different investments that are designed to be a hedge against inflation. Some, like gold and other precious metals, have fallen into this role over thousands of years. Others, namely Treasury Inflation Protected Securities (TIPS) have been specifically designed to provide a hedge against rising prices.
When it comes to investing, protecting your money against inflation is often seen as a bare minimum result that investors should be aiming for. At a time when inflation is flirting with double digits, that turns into a result that any investor would jump at the chance to receive.
In order to give investors the opportunity to protect their funds against inflation, we created the Inflation Protection Kit. This Kit holds traditional inflation hedges like gold and other precious metals, as well as TIPS and even agricultural commodities, the values of which are also closely aligned with rising prices.
This isn’t the type of kit to get you sky high returns, but it’s a low risk way to provide some additional protection to rising prices. It also introduces certain assets that you aren’t likely to find in most mainstream portfolios which increases overall diversification.
Top trade ideas
Here are some of the best ideas our AI systems are recommending for the next week and month.
ACI Worldwide – The payment processor is one of our Top Buys for next week with a B rating in Growth and Quality Value. Earnings per share was up 8.31% over the past 12 months.
Sunworks Inc – Solar manufacturer Sunworks is one of our Top Shorts for next week with our AI rating them a D in our Quality Value, Technical and Low Momentum Volatility factors. Earnings per share are down 30.26% over the past 12 months.
Catalyst Pharmaceuticals (CPRX) – The pharmaceutical company remains a Top Buy for next month with an A in our Quality Value and a B Growth. Earnings per share have grown 11.68% over the past 12 months.
Chemocentryx Inc – The biotech company is one of our Top Shorts for next month with our AI rating them an F in our Low Momentum Volatility, Technicals and Quality Value factors. Earnings per share is down 14.39% over the past 12 months.
Our AI’s Top ETF trade for the next month is to invest in high growth stocks, natural gas and semiconductors, while shorting China and short term bonds. Top Buys are the United States Natural Gas Fund LP, the ARK Innovation ETF and the VanEck Semiconductor ETF. Top Shorts are the iShares China Large-Cap ETF and the Vanguard Short-Term Bond ETF.
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