Picture this…
Everyone at the party is talking about their amazing AI stock picks. Your barista is day-trading Palantir (PLTR), and even grandma wants “that ChatGPT company.”
Sound familiar? Welcome to what might be the biggest bubble since pets.com thought it would revolutionize… well, pets.
Meet Your New Best Friend — or Worst Enemy
Michael Hartnett, Bank of America’s chief investment strategist and professional party-pooper, just dropped a reality bomb that should make every AI investor sweat. This guy writes “The Flow Show” – a weekly reality check for investors who’ve lost touch with, you know, reality.
Since April’s market crash, just 10 stocks (the Magnificent Seven plus Oracle (ORCL) and Palantir) have driven 80% of the entire S&P 500’s gains. That’s like one kid doing 80% of the group project while everyone gets an A+.
Here’s the kicker…
Companies will spend $2.9 trillion on AI by 2028 (thanks, Morgan Stanley optimists). What are we getting for this massive investment? About as much productivity boost as a chocolate teapot. U.S. labor productivity is flatlining, and unemployment for recent college graduates just hit 8.1%.
The Signal to Watch
Hartnett isn’t throwing darts here. He’s watching for tech credit spreads to widen – basically when banks start getting nervous about lending money to AI companies. Think of it like charging your friend higher interest when you realize their “revolutionary” ice-selling-to-penguins business plan is questionable.
We’ve seen this movie before — specifically in 1999, right before the dot-com bubble burst and wiped out $6.5 trillion. The scary part? Some economists say this AI bubble is actually worse. We’re spending $560 billion to generate $35 billion in revenue.
That’s like spending $100 to make $6.
The Goldilocks Delusion
Currently, 60% of investors think everything is “just right” – rates will fall, stocks will rise, and everyone lives happily ever after. It’s like believing in Santa Claus, except Santa is the Federal Reserve and the presents are stock gains.
Meanwhile, in a plot twist worthy of M. Night Shyamalan, the Russian ruble is up 42% this year, Poland’s stock market is up 54%, and Ukraine bonds are up 61%. Apparently, while Americans argue about AI replacing jobs, the rest of the world is quietly making money.
Your Takeaway
Keep your eyes on those tech credit spreads. When banks start demanding higher returns for higher risk, this AI house of cards might tumble. Until then, enjoy the ride, but maybe don’t bet your kids college fund on ChatGPT solving world hunger.
Remember… In the stock market, the only thing that goes up forever is your student loan debt. Everything else? Well, that’s what makes investing so much fun.
When everyone thinks they’re a genius, the market has a funny way of proving them wrong. Stay alert, stay skeptical and maybe keep some cash handy for when reality comes knocking.
Jeffry Turnmire
Jeffry Turnmire Trading
I host my “Morning Monster” livestream at 9:15 a.m. ET each weekday on YouTube, and then “30 Minutes of Awesome” at 5 p.m. ET each Tuesday!
Please check out my channel and hit that Subscribe button!
You can also follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram:https://t.me/+6TdDE7-F6GlhMmJh
Important Note: No one from the ProsperityPub team or Jeffry Turnmire Trading will ever message you directly on Telegram.
I’m just a regular dude in Knoxville, Tennessee: a husband, father, civil engineer, urban farmer, maker and trader.
I’ve been at this trading thing with real money for 20-plus years, and started paper trading over 35 years ago. I have a knack for making some epic predictions that just may very well come true. Why share them? Because I like helping other people — it’s the Eagle Scout in me.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. We Could Be Days Away From a Major Tech Sell-Off!
August and September are historically the worst for the Big tech stocks…
And right now, the signs are already shaping up again.
From what I’m seeing, the next 30-60 days could be filled with volatility… or even worse, a big sell-off!
That’s why I’ll be live with Jack Carter on Wednesday at 2:30 p.m., when he’ll show us how we can stay one step ahead!
