I get it. AI is hip.
It’s cool.
And if you say you can help use it on daily tasks, it’s a great look. But this is not the next crypto wave where everything with AI in its name shoots sky high.
This is different.
And I think Microsoft just marked the top.
I love AI just as much as the next guy. It’s a generational technology that will advance civilization like never before. And it’s time will come, that is without a doubt.
Just not today.
But apparently I’m the only one feeling this way. Because when Microsoft announced a new subscription that would incorporate AI in its popular office products, that stock shot up 4% to an all-time high.
There’s so much wrong with this that I don’t know where to start.
But we’ll take it from the top – you can’t subscribe to this service.
And that’s just the tip of the iceberg here…
You’ve seen this before. Mainstream media hyping up a central angle.
It usually ends badly, and as I’ll explain today, it likely does again. But that doesn’t mean you have to suffer too.
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Investors are estimating enterprise consumers, assuming they all upgrade to this new service, would end up paying 83% more per month, nearly doubling Microsoft’s revenue.
This sounds great on the surface, but keep in mind most consumers are not even playing with ChatGPT yet. It’s out there, and very popular, but it is not as widespread as it may seem. You can still bring it up in some conversations, outside of the younger workforce primarily, and they have never heard of it.
It’s free, Microsoft is a part owner, but so is Elon Musk and OpenAI runs it. There are upgraded options for it as well, to unlock more features, but right out of the gate, it will help you do a lot of what Microsoft is trying to charge for. You’ll just have to copy and paste more info.
Still, Microsoft is set to make a premium product and useability with it, which could come with an advantage. But, once again, you can’t even subscribe to it yet and they didn’t announce when it would be rolled out.
All of that just to say I love AI and there is a bigger picture item here that will hold the progress back and mark the ultimate top to this short-term rally – a recession.
The Looming Recession
This economy and stock market are in the middle of a historic bursting of a bubble that hasn’t completely unfolded yet. You don’t have to look past interest rates. This debt bubble that has ballooned since 2008, is not going to settle in a cloud of dust.
It’s going out with a bang.
And the Fed is still pumping rates higher!
This is going to roll the market and economy and not even AI is going to save us. It’s not an eternal bear market or recession here, just a correction to the accumulation of debt in recent years. That, with financial tightness and higher rates, is going to create a nasty little spiral that echos through the market and economy in similar fashion.
You could look at all the statistics you want about the troubles ahead, some offer a glimpse of hope, while some point to doom.
Just know this, the economy and stock market has never dodged a recession and crash when the Fed is going through a rate hike cycle in modern times.
The cycle isn’t over yet.
That means the worst is yet to come.
I hate to leave you like this two weeks in a row, with a gloomy outlook. It’s just a sign of the times. Enjoy this little run up, but be prepared to make money on the crash too!
Regards,
Chad Shoop, CMT
Editor, Bank It or Tank It ELITE