AI, CEOs, Yields, And Peace

AI, CEOs, Yields, And Peace Authored by Peter Tchir via Academy Securities, AI largely drove the show last week on the risk front. We started poorly, as Blue Owl pulling out of a future Oracle deal triggered some fears. But we finished the week strong as Micron had a solid beat, alleviating many concerns (a nice, soft CPI print helped matters too). This flip-flopping back and forth on the AI story fits well with last week’s themes - AI Debt Diet vs AI Spend Diet . Bitcoin seemed to be a decent leading indicator for stocks, but the past few days watching Bitcoin’s intraday moves was about as painful as watching Elaine dance on Seinfeld. Equity markets are hovering near important levels. I know we’ve been talking a lot more than usual about technical levels, but they often seem to play a more important role during slow, less liquid periods than normal. The Nasdaq 100 bounced, just above the 100-day moving average (like it did in November when the Fed turned dovish). It closed just above the 50-DMA on Friday, which if it holds, should let the Santa rally loose. If it fails, we could be testing the 100-DMA for the 3rd time, and that tends to not work well. With a holiday shortened week, let’s have some fun with AI. What If CEOs Were Being Replaced by AI? With markets being powered by AI, it is one of the main topics of conversation. Literally, every conversation. In general, I’m on board with the importance of AI. I use it. It is improving rapidly. Having said that, using it “hampers” learning (not searching, reading, and digesting info on my own) and creates “work” around looking for hallucinations. I’d rather do some of the original, interesting work, including going down the wrong path, than searching for ticker symbols that don’t exist, etc. I do worry about the spend versus the results, at today’s costs and usefulness. What I’ve been wondering lately is how much demand there would be for AI if CEOs thought they were going to be replaced by AI? First, let’s make it abundantly clear, the CEOs can be guilty of “herd mentality.” Remember when every company had to have a China strategy? When any announcement of investment in China by U.S. companies triggered stock price gains! See Free Money . The rationale was there: The potential to sell into a market of 1 billion people, whose incomes and net worths were growing. Even cheaper supply chains. Yeah, yeah, there were people who questioned whether a 51% stake for China made sense. Questioned whether China would ever truly open their markets and whether Chinese consumers would ever spend much on “American” goods? Heck, some even questioned the ability to protect IP. At the time, naysayers were drowned out and CEOs were rewarded for their skills in driving business to China. It didn’t always work out quite as planned. I’m not arguing that the investment in AI is anything like...

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