Stock Markets Failing to Give Another AI Mega-trend Buying Opportunity

By: Nadeem_Walayat

My analysis of Late April concluded in expectations for a correction to about 21,000 by the 3rd week of May.

The subsequent correction turned out to be a lot milder than expected and begs the question whether the current rally is sustainable.

After all corrections are healthy for bull markets. So I suspect we are in for a more significant correction than so far experienced during May as soon as the Dow is done trading higher. As the Dow is basically ignoring ALL of that real world economic pain of ordinary people right across the western world, that has seen over 40 million jobs lost in the US alone, wages cut, industries experiencing severe contraction with the academic crowd that populate the mainstream press focused on the V shaped recovery becoming a U shaped to now becoming an L shaped recovery and then we have the Corona riots! But despite despite all of this the stock market heads north! Why?

My readers should know why in terms of the big picture of the twin mega-trends of INFLATION and AI which is CONVERGING towards the Quantum computing EXPLOSION, towards which Coronavirus is acting as an accelerant. And it WILL be an EXPLOSION!

For an idea of what's unfolding in terms of practical quantum computing then watch this 30 minute video from IBM before buying more stock. Remember we're investing in the FUTURE not the PAST and stock markets discount the future.

And do take note that today's Quantum computers are NOTHING compared to what is to follow pending innovations, just as CPU's went from hundreds of connected transistors to tens of billions on a chip so will today's 53 Qubit IBM processors go to hundreds, then thousands, then millions and eventually billions of Qubits! It's hard enough for me to get my head around the amount of processing power a 1000 Qubit processor will be able deliver let alone 100,000 qubits, then millions, and billions, it will be EXPLOSIVE! That AI will capitalise upon towards ends we can only imagine, such as rendering reality from the quantum fields upwards into whatever we. or rather the AI wants it to be.

So basically the stock market is stating this - Humans (workers) are fast becoming obsolete. In fact I'd happen a guess that most of those 40 million US of millions of jobs lost are NOT coming back! Automation PLUS machine intelligence means humans now really are becoming OBSOLETE! And that is what the stock market is discounting, corporate cost savings on an epic scale that the Pandemic has accelerated the trend towards.

This trend was in progress BEFORE coronavirus HIT, after all we have been investing in it at every opportunity for the past 5+ years. What coronavirus did was give us all that RARE once in a decade opportunity to easily get rich by BUYING AI mega-trend stocks at deep discounts of upto 40% on where the stocks where trading just a couple of months earlier! As I wrote at the time in Mid March in the midst of the panic collapse in stock prices.

The bottom line is that unless the virus is such that a working vaccine is impossible, then the Coronavirus market panic of 2020 is TEMPORARY!

So if I expect the AI stocks to eventually trade back TO NEW ALL TIME HIGHS, and it does it matter how low they trade during this panic or whether one buys Google at $1200 or $1100 or $1050, as in the long-run it's not going to make that much difference, the main thing is to be INVESTED, and the Coronavirus despite the palpable FEAR it is generating for genuine reasons, is still giving ALL a golden opportunity to pick up stocks selling typically 1/3rd cheaper than a few weeks ago.

Of course the other big mega-trend at play in this is INFLATION! The Fed prints money to buy assets such as stocks and bonds because they understand that to avoid a depression they need to prevent asset price deflation.

To further illustrate the point about 120 years ago our cities were full of intelligent giants that were nearly as numerous as humans, then within the next 20 years over 90% of them disappeared forever! you would know them as HORSES!

As I stated in my end April article, Coronavirus should be viewed as a disruptive technology that is acting to accelerate the AI mega-trend which means that the corporations that emerge from this crisis won't be looking to hire flesh and blood workers but invest in algorithms , AI cloud machine learning systems, which means it won't even be necessary for most to buy new hardware to profit from AI. Even the distant dream of Quantum computing is fast becoming a reality via cloud services as virtually anyone right now can create an account on IBM's quantum computing site and then run queries using their growing number of cloud Quantum computers (18), all without much know how about how the Quantum computers do their Qubits computational magic as IBM has been busy creating the circuits deployed as functions that programmers using classical computers and more importantly classical programming languages such as C++, Python and even PHP to call Qubit circuit functions.

We are getting there fast folks, and the stock market rising when it should be correcting is just one more sign of the consequences of this EXPONENTIAL mega-trend. Hopefully my Patrons are already well on board the AI mega-trend gravy train given the buying opportunity of a decade that the markets delivered mid March 2020 with hopefully several more to come this year, though of course we will likely never see the March lows again. for our key stocks

Meanwhile most remain blind to this mega-trend with politicians in America especially still harping on about immigrants taking american jobs. It's not the mexicans who are taking the jobs it's automation! And it's going to get exponentially worse! For instance before the end of this decade access to beyond human level intelligence will be able to be deployed via cloud computing services for whatever purpose users wish to utilise it, either as a brain for a robot, or as workers in virtual offices all administrated from something as small as smartphone, much as we today subscribe to the likes of netflix and itunes!

And the only solution I can see to the obsolesce of human workers will be for some sort of universal income that would allow most humans to have the means to spend a large part of their lives in virtual worlds.

Where the general stock market indices are concerned (Dow) then it would be too simple to look at 2009 for what to expect to happen next, i.e. a new bull market that persistently trends to new all time highs and then beyond. THAT WOULD BE TOO SIMPLE FOR HISTORY TO REPEAT. So whilst AI stocks undoubtedly ARE heading for new all time highs, I suspect the general stock indices are going to have things much tougher this time round.

Anyway in the meantime just repeat this mantra, whenever you see the stock market take a plunge - BUY AI stocks Whilst keeping an eye on those forward P/E ratios so as to make sure were not making the mistake of buying thin air, as was the case for most Nasdaq stocks during the 1990's. And don't fret there will be more buying opportunities as this chaos theory balancing act the central banks are running is prone to temporary market panic events.

In terms of the general stock market trend, it really should correct, but so far it's refusing to do so, maybe setting itself up to enter a Fed engineered stable trading range for a while. More in a future stock market analysis article.

The whole of this extensive analysis that concludes in a detailed trend forecast for the Silver price was first made available to Patrons who support my work: UK and US Corona Catastrophe Trend Analysis, Stock Market State and Silver Price Trend Forecast Summer 2020

• UK Corona Catastrophe Trend Analysis
• FEEDING THE INFLATION MEGA-TREND
• US Corona Catastrophe Trend Analysis
• The Corona Riots of 2020 Have Begun!
• Stock Markets Failing to Give Another AI Mega-trend Buying Opportunity
• Silver vs Gold Trend
• Gold Silver Ratio
• Silver Long-term Trend Analysis
• Silver Trend Analysis
• Formulating a Trend Forecast
• Silver Price Trend Forecast Conclusion

So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

And ensure you are subscribed to my ALWAYS FREE newsletter for my next in-depth analysis.

Your analyst.

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2020 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.