#Economy & #Stocks Review - AI With Birth An Eras of Endless Prosperity

E&S Review

Much of today's economic data, time series officially collected and produced, are highly unreliable. Statisticians employ well-documented techniques such as geometric smoothing, seasonal adjustments, substitution, double counting, and hedonic to adjust economic outcomes as far back as the 1980s. Politicians and central bankers use these techniques for political gain.

Data massaged by statistical techniques (tricks) are revised when nobody is looking, or Administrations or public policies change.

Subscriber Comments

Five stocks have accounted for 60% of the S&P 500 total YTD return. MSFT, NVDA, GOOGL, AMZN, and META have collectively surged by 45% and now comprise 25% of the S&P 500 equity cap: GS pic.twitter.com/B9jYNh8PZh

— zerohedge (@zerohedge) June 15, 2024

Five stocks have accounted for 60% of the S&P 500 total YTD return. MSFT, NVDA, GOOGL, AMZN, and META have collectively surged by 45% and now comprise 25% of the S&P 500 equity cap: GS pic.twitter.com/B9jYNh8PZh

— zerohedge (@zerohedge) June 15, 2024

The stock market rally will have everyone drinking the same Kool-Aid. The majority see the artificial intelligence (AI) rally, similar to the radio and Internet, driving an era of endless prosperity.

“Stock prices have reached what looks like a permanently high plateau,” Irving Fisher New York Times, October 24, 1929.

The stock market crashed on October 29, 1929.

Nvidia ($NDVA), the leading maker of AI chips, rules the space without significant competition; It's doubtful Intel and other leading chip manufacturers let $NVDA maintain a monopoly in high margin AI chips for long. The majority believes that AI will do our thinking, cure cancer, obsolete millions of jobs, and benefit the global economy in ways the world does not understand. Wonder what Irving Fisher would have to say about it in 2024?

The majority likes drinking Kool-Aid. Students of stock market history remind us that the majority become bag holders in RCA, Cisco System, and eventually Nvidia (See charts). Nvidia ($NDVA) dominates the major stock indices, but the majority isn't worried. This is not a forecast of another Great Depression or bubble bursting, yet. The computer will help us do that.

Chart 1: RCA

Chart 2: Cisco System

Chart 3: Nvidia

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The Matrix provides market-driven trend, cycles, and intermarket analysis.