Powell’s hawkishness isn’t stopping tech … a sector where tech gains can outpace rate hikes … a big announcement from biotech … all eyes on tomorrow’s PCE report By day, he’s just a mild-mannered Federal Reserve Chairman. But by night, he’s our nation’s only hope against the ravaging predations of inflation...
He’s…Fiscal Hawkman!
Yesterday, Jerome Powell really went for it, all-but telling the market that rates are headed higher.
Here’s Powell, speaking during a monetary policy session in Portugal: We believe there’s more restriction coming. What’s really driving it ... is a very strong labor market.
I wouldn’t take, you know, moving at consecutive meetings off the table. He also added “there’s a significant possibility that there will be [an economic] downturn” and “core inflation will get back to 2% in 2025.”
2025? Haven’t we heard from various talking heads that 2% inflation is currently within throwing distance?
These comments would seem hawkish enough to roil the tech-heavy Nasdaq, but the response was muted. Traders were more concerned about news that the White House might clamp down on sales of semiconductors to China.
Despite the various headwinds, the Nasdaq finished the day in positive territory.
Stepping back, if Powell continues to hike rates and holds them at elevated levels for the foreseeable future it’s bad news for tech stocks. So, why do tech investors appear utterly unconcerned anymore?
Well, it looks like Wall Street has decided the old mantra of “don’t fight the Fed” has met its match in a new axiom…
Don’t fight Artificial Intelligence (AI). ADVERTISEMENT A.I. predicts the future price of NVDA, AAPL and SYM During a recent special event, Louis Navellier introduced you to a breakthrough, new A.I. algorithm called An-E... and showed many of its past predictions and just how accurate they were (often precise to within a tenth of a percent).
Well, during the event we also showed what An-E's predictions were for three of the most widely held stocks on the market one-month into the future.
You can see what those predictions are by going here. Can a new profit-juiced AI economy outpace the financial headwind of rate hikes? We’ve noted many times here in the Digest that it’s not so much a “stock market” as it is a “market of stocks” with wildly different fortunes. So, while AI will destroy some specific companies, it will result in a profit-bonanza for others.
And though there’s plenty of AI-hype out there today that will disappoint investors in some companies, the roaring enthusiasm is much-deserved for others. In fact, AI will be so powerful/profitable for certain businesses that the related profit-surge can outpace the impact of a hawkish Fed.
Yesterday, our technology expert and editor of Innovation Investor , Luke Lango, highlighted a headline event in the world of biotech as an example.
Here’s Luke to set the stage: Generative AI will be used to improve and accelerate the drug discovery and development process to a point where we may be able to discover a cure for literally everything.
That may sound a bit outlandish. But just yesterday, we got confirmation that this has actually already begun.
New York-based drug discovery startup Insilico Medicine announced that its drug candidate aimed to treat idiopathic pulmonary fibrosis – a relatively rare respiratory disease that causes progressive decline in lung function – entered Phase 2 clinical trials. Luke makes it clear that dozens of drugs entire these Phase 2 clinical trials every month. The difference here is that Insilico used AI to develop this drug.
Consider what this means…
AI identified a molecule that a drug compound could target… it then generated novel drug candidates… it gauged the efficacy of the drug candidates… and finally, it predicted the outcome of clinical trials.
Back to Luke for the financial payoff of using AI for these functions: Insilico estimates that, if it used traditional methods, it would have cost the firm six years and upwards of $400 million to discover this drug candidate.
With AI, Insilico was able to do it in just two-and-a-half years and at a cost of just $40 million.
AI accelerated Insilico’s drug discovery development pace by ~60% and lowered its costs by ~90%. Obviously, it’s not just Insilico that’s benefiting from AI. The entire biotech space is poised to reap a windfall. From Morgan Stanley: For biotechnology companies, much of the traditional process of discovering new drugs is costly guesswork. But a new wave of drug development platforms, enabled by artificial intelligence, is helping companies use vast data sets to quickly identify patient response markers and develop viable drug targets more cheaply and efficiently…
Biotechs are applying AI and machine learning to drug development, potentially creating dozens of new medicines and a $50 billion market over the next decade. Don’t fight AI. The AI-based advancements in biotech aren’t limited to just one application Our macro expert and editor of Investment Report, Eric Fry, also has been taking the pulse of AI advancements in the healthcare space. But his focus hasn’t been drug discovery.
From his May issue of Investment Report: According to Grand View Research, artificial intelligence will become a key driver of medical device innovation over the coming decade.
The research firm predicts the AI component of the healthcare market will skyrocket from $15.4 billion in annual sales last year to more than $200 billion in 2030. That’s a compound annual growth rate of 37.5%.
To support its robust forecast, Grand View explains…
“Healthcare functions such as diagnostics, patient management, medication management, claims management, workflow management, integration of machines, and cybersecurity saw a remarkable surge in the integration of AI/ML technologies.” Eric’s May recommendation was a direct play on the intersection of health care and these broader AI applications. I can’t reveal its name out of respect for Eric’s subscribers, but he describes it as a “solid, steadily growing medical imaging company that also includes considerable fast-growth potential from its AI product line and investments.”
You can click here to learn more as an Investment Report subscriber. ADVERTISEMENT VC issues new kind of AI warning According to Elon Musk, “we need to be very careful about artificial intelligence.”
And yet following the money reveals a completely different story.
It’s why venture capitalist Luke Lango just issued a new kind of AI warning.
Click here because he says you only have ONE shot to act. Meanwhile, we can’t mention “AI” without highlighting last week’s blockbuster event with Louis Navellier and Keith Kaplan Last Tuesday, legendary investor Louis Navellier sat down with Keith Kaplan, who is the CEO of our corporate partner, TradeSmith.
If you’re new to the Digest, TradeSmith is one of the preeminent AI companies in the investment industry. And last week, they introduced an AI-fueled tool called An-E that’s creating a buzz unlike just about anything we’ve seen before.
In short, An-E (short for Analytical Engine) predicts upcoming stock-price movements – usually with an astonishing degree of accuracy.
Keith recently presented the results of some of An-E’s back-tests and predictions. One example comes from Ball Corp.
Below, the red “X” represents when An-E made its prediction and the blue circles represent its price predictions two weeks, one month, and two months into the future. 
And here’s what actually happened. The green line shows Ball Corp.’s stock path over the next two months. 
If you missed the live event with Louis and Keith, you can watch a free replay by clicking here. You’ll see far more back-test results. And you’ll even find out what An-E predicts for the upcoming market price of Nvidia, Apple, and Symbotic. ADVERTISEMENT This A.I.’s predictive power can bring you a rich retirement A brand-new A.I. algorithm recently came onto the scene that can predict stock prices one month into the future with astonishing accuracy.
Imagine if you had this kind of predictive power. It could be a complete retirement gamechanger.
Click here to get the full story and to see what this algorithm is saying the price of NVDA, AAPL and SYM will be one month from now. Leaving AI and coming full circle to Powell and rates hikes, all eyes are on tomorrow Let’s return to Powell’s comments from yesterday. Here he is speaking to inflation’s stubbornness in coming down this year: It’s gonna take some time. Inflation has proven to be more persistent than we expected and not less.
Of course, if that day comes when that turns around, that’ll be great. But we don’t expect that. As we detailed in our Tuesday Digest, tomorrow, we get the latest Personal Consumptions Expenditures (PCE) report. This is the Fed’s preferred metric. As it goes, so too goes the Fed’s conclusion about the state of inflation.
As we highlighted on Tuesday, the Core PCE numbers haven’t fallen nearly to the degree that many other inflation measures have in recent months. This is why Powell remains hawkish.
So, if the numbers tomorrow come in stubbornly high, look for Powell to maintain his hawkishness, and we’ll likely hear louder rumblings of consecutive meetings featuring interest rate hikes.
But if the numbers surprise to the downside, then we may finally see cracks in Powell’s tough guy façade, which should pave the way for a huge market rally.
Either way, in the meantime, AI stocks continue chugging higher.
And why not? As the old new saying goes…
Don’t fight AI.
Have a good evening, Jeff Remsburg | 
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