Another Rate Hike Could Be Coming Soon And Inflation Starts To Dip

TL;DR

• Inflation has gone down for the first time since April 2020—at -0.1%, it’s not exactly a massive drop, but its progress
• The Fed is now expected to hike interest rates by 0.25 percentage points at their next meeting at the beginning of February
• AI is exploding (we’ve obviously set a trend) with programs like ChatGPT and Dall-E showing the potential to cause major disruption to many industries
• Top weekly and monthly trades

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Major events that could affect your portfolio

For the first time since April 2020 average prices have fallen. Ok, it might only be by 0.1%, but nevertheless, it’s the first actual fall in inflation we’ve seen in almost three years.

It also brings the headline annual rate down from 7.1% to 6.5%, which is still high but starting to look like it’s back in the realm of the real world.

Reductions in the prices of fuel oils and gasoline was the major driving factor (see what we did there?) in the falling inflation figures, with gasoline prices dropping 9.4% in December and other fuel oils by 16.6%.

Food prices also went down slightly, as did new and used cars and trucks and commodities.

It’s good news for the Fed, who have had to pull out all the stops in order to bring down the rate of inflation. The rate hikes have been larger and quicker than we’ve seen since the 1980s, though these latest figures point towards a continued easing of this aggressive pace.

After four 0.75 percentage point increases to start 2022, the last Fed meeting in December saw rates upped by 0.50 percentage points. Analysts are now expecting to see a rate hike of 0.25 percentage points in February.

For investors it doesn’t change the status quo just yet, but it’s another sign that the bad times won’t last forever.

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Sure, you could call us biased, but AI’s time looks like it might have come.

There’s been an explosion of the awareness of AI into the mainstream, and we’re seeing some truly disruptive technologies being tested in public.

From self-driving cars to image generators like Dall-E and Stable Diffusion, and now we’ve got the most sophisticated language model we’ve ever seen in ChatGPT.

ChatGPT has been created by OpenAI, which was originally co-founded by none other than Elon Musk, though he stepped back from the company a number of years ago. There’s been a huge amount of buzz created about the model’s ability to answer queries in a natural way.

From an investor standpoint it’s an exciting time of innovation.

Microsoft owns 49% of OpenAI, and there have already been rumors of the algorithm behind the technology being integrated into their Google Search competitor – Bing.

Many are calling ChatGPT a ‘Google killer,’ but those in the know believe that Google have been well aware of the technology for years, and have likely been working on their own model to rival OpenAI’s creation.

Regardless of who wins the AI race across all the different industries utilizing it, there’s no denying it has the potential to change the landscape for investors. We could see big shakeups to the Silicon Valley hierarchy, as well as the potential for disruptions from AI focused startups across all sectors.

Watch this space.

This week’s top theme from Q.ai

How can we sum up the tech sector in 2022? Volatile? Rocky? Challenging? Downright freakin’ terrible? Probably all of the above.

One of the few benefits of an industry tanking so hard is that the only way is up. Well, hypothetically. Let’s not kid ourselves, tech could still have further to fall, but even so, big drops do offer up opportunities for investors.

If we look back in five years time, 2023 could potentially turn out to have been a pretty good time to wade back in.

Look, we’re not going to pretend to have a crystal ball, but if you’re feeling like tech is looking like an attractive bet right now, we do have a great way for you to invest. Picking stocks is so 2020, and with AI accelerating its takeover, maybe it’s time you leaned into it.

For tech investing, that means our Emerging Tech Kit. It uses the power of AI to predict the performance and volatility of a range of different securities within four verticals. These verticals are tech ETFs, large cap tech stocks, growth tech stocks and cryptocurrencies via public trusts.

Every week our AI takes these predictions and automatically rebalances the portfolio. It takes into account massive levels of data from a huge range of sources, in a way that us mere mortals simply can’t replicate.

So if you’re thinking that tech might be primed to get back into the winners circle, take a look.

Top trade ideas

Here are some of the best ideas our AI systems are recommending for the next week and month.

Harmony Biosciences (HRMY) – The pharmaceutical company is one of our Top Buys for next week with an B rating in Technicals, Quality Value and Low Momentum Volatility. 2022 Q3 was up 48.1% YoY.

Alnylam Pharmaceuticals (ALNY) – The pharmaceutical company is our Top Short for next week with our AI rating them a F in Quality Value. Earnings per share is down 14.29% over the last 12 months.

O’Reilly Automotive (ORLY) – The auto parts retailer is one of our Top Buys for next month with an A rating in Quality Value and Low Momentum Volatility. Earnings per share are up 9.84% over the past 12 months.

Lulu’s Fashion Lounge Holdings (LVLU) – The fashion retailer is our Top Short for next month with our AI rating them an F in Low Momentum Volatility. The company only IPO’d in November 2021.

Our AI’s Top ETF trade for the next month is to invest in large cap Chinese stocks, healthcare and industrials, and short the Russell 2000 and small caps. Top Buys are the iShares China Large-Cap ETF, the Invesco DWA Healthcare Momentum ETF and the Vanguard Industrials ETF. Top Shorts are the iShares Russell 2000 ETF and the Vanguard S&P Small-Cap 600 ETF.

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