TL;DR
- Failure to reach agreement on the U.S. government debt ceiling could mean a default on Treasury bonds - but don’t hold your breath
- AI regulation is set to become a much more important topic, with OpenAI founder Sam Altman one of many testifying before congress on the topic
- For investors, there are many ways to profit from AI advances, including investing the hardware needed to run the sophisticated algorithms
- Top weekly and monthly trades
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Major events that could affect your portfolio
We’ve started to hear a lot more about the debt ceiling over recent weeks. Lawmakers can’t seem to agree on getting it raised, in a game of chicken as both sides of the aisle jostle for some extra ground. Agreement needs to be reached by June 1st, or else the U.S. government risks running out of cash to pay federal workers, keep national parks open and potentially even default on U.S. Treasury bonds.
President Biden has stated that “It would be catastrophic for the American economy and the American people if we didn’t pay our bills” and U.S. Treasury Secretary Janet Yellen has also been sounding the alarm, saying that “It makes me nervous. It would be devastating.” and that a default would lead to a “financial crisis.”
But let’s be clear. This is highly, highly unlikely to happen.
If it did, it would lead to the worst financial crisis in our lifetime. Potentially of all time. The US government has never defaulted on debt before, though there have been government shutdowns when agreement hasn’t been reached on the debt ceiling.
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Even if an agreement isn’t reached, it doesn’t mean the government has no money at all. It would just mean that government spending would need to be reduced to match its income, which would still result in major disruption to the functioning of anything controlled by the federal government, including welfare programs and federal workers salaries and pensions.
Should investors be worried? Never say never. But most likely not.
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More government stuff for the second take this week, but now we’re talking about regulation. Specifically, AI regulation. This has been a topic almost as hot as AI development itself, with a huge number of high profile executives, founders and commentators pushing for the government to step in and create laws around the space.
In March, an open letter signed by 1,800 notable tech experts, including Elon Musk and Apple
Even Sam Altman, the founder of OpenAI, the company behind ChatGPT, has made multiple public comments on his concerns about the future of AI without the right laws in place.
And while no one would ever suggest governments have a tendency to act quickly, the wheels of regulation look to be slowly turning.
Just this week, Altman and many others are testifying before Congress as they look to implement guidelines for AI technology. It’s hoped that these guidelines won’t just cover safety aspects, but also provide on areas such as copyright, with current models using vast amounts of copyrighted material for their training algorithm.
For investors, it’s a space to watch carefully. The winner of the AI wars is necessarily going to be just the company with the best tech, but also the one who manages to offer the best user experience for consumers whilst navigating the yet to be detailed regulations.
This week’s top theme from Q.ai
Regardless of how the regulation plays out, AI isn’t going anywhere. The cat is well and truly out of the bag, with tech companies rolling out new AI features across their existing products every day. Not only that, we’re also seeing a huge influx of new releases and new companies entirely, sprouting up to ride the AI wave.
Of course, there are going to be winners and losers here. The likelihood is that many new AI startups will fail over the coming years, as the industry matures and consolidates. But no matter whether the dominant force in AI turns out to be Google
Microchips.
Machine learning models that run AI use a huge amount of processing power. In order to keep up with the complexity and demand of AI technology, companies need a vast number of highly efficient and powerful microchips.
That means that companies that make them are in the box seat. It’s why companies like Nvidia (+117% YTD) and Taiwan Semiconductor (+17.44% YTD) have gotten 2023 off to a flying start, as well as performing surprisingly well over recent years due to the Covid-induced microchip shortage.
To invest in this trend, we’ve got the Global Microchip Shortage Kit, which uses the power of AI to invest in global microchip foundries, automatically adjusting the stocks selected every week based on AI predictions. It’s cutting edge tech, and we’re not just talking about the chips.
Top trade ideas
Here are some of the best ideas our AI systems are recommending for the next week and month.
Yellow Corp (YELL) – The transportation company is a Top Buy for next week with our AI giving Yellow an B rating in Technicals.
Clearfield (CLFD) – The fiber optic cable company is a Top Buy for next month with an B rating in our AI’s Quality Value and Growth factors. Revenue was up 71.8% year over year to March 31st.
Our AI’s Top ETF trades for the next month are to invest in U.S. oil and gas and to short U.S. Treasuries, micro-cap stocks and small-cap stocks. Top Buys are the ProShares UltraShort 20+ Year Treasury ETF, the United States Natural Gas Fund LP, the SPDR S&P Oil & Gas Equipment and Services ETF and Top Shorts are the iShares Micro-Cap ETF and the Vanguard Small-Cap ETF.
Recently published Qbits
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The article you've provided touches on several complex and intertwined topics, including the U.S. government debt ceiling, the potential for a default on Treasury bonds, AI regulation, the testimony of key figures like Sam Altman before Congress, investment opportunities in AI and related hardware, and the performance of specific sectors like microchips.
Starting with the U.S. government debt ceiling, this is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may borrow. Failure to raise the debt ceiling can lead to a government shutdown, as expenditures exceed revenues. While the U.S. government has never defaulted on its debt, the mere possibility can unnerve markets and investors, potentially leading to economic and financial instability. U.S. Treasury Secretary Janet Yellen's concerns reflect the serious economic implications of a default, which could trigger a financial crisis.
Regarding AI regulation, this is becoming increasingly significant due to the rapid development and deployment of AI technologies. High-profile individuals like Sam Altman, Elon Musk, and Steve Wozniak advocating for government intervention highlights the potential risks associated with AI, including ethical considerations, privacy issues, and the use of data. The testimony before Congress by industry leaders is an important step in shaping the future regulatory landscape for AI, which could impact how AI technologies are developed and used.
The investment aspect in AI and related hardware is noteworthy. AI technologies require substantial computational power, necessitating advanced microchips and processors. Companies like Nvidia and Taiwan Semiconductor have seen significant growth due to their roles in supplying the necessary hardware for AI applications. Investing in these companies or related sectors could be a strategic move for investors looking to capitalize on the AI boom.
Lastly, the article mentions investment strategies and trade ideas, suggesting opportunities in sectors like transportation, fiber optics, and energy, as well as specific investment products. It emphasizes the dynamic nature of the investment landscape, influenced by technological advancements and regulatory changes.
In summary, the article covers a broad spectrum of topics, each interconnected with global economic trends, technological advancements, and the evolving regulatory environment. The implications for investors, governments, and the tech industry are significant and multifaceted.
