Digest: The Hottest Stock on the Planet

Plus, Why Farmers Are Abandoning Their Fields.

Welcome to the digest… my breakdown of the things we’re thinking about and talking about in the Global Intelligence world.

First up this week… the hottest stock on the planet.

Two years ago, it was vaccination technology. In 2022, it was the “metaverse.” This year, the trend causing mass investor excitement on Wall Street is artificial intelligence.

AI has become widely popular in recent months due to the emergence of ChatGPT.

This program, and other similar online AI tools, can generate answers to just about anything you ask it to do. College and high-school students have been using it to write amazingly nuanced and cogent essays. Others have been creating art with it. And still others have used it to write computer code for stock and currency trading programs that have proven profitable.

Though experts have been predicting the emergence of AI for years, investors can now see the potential with their own eyes. And money is pouring into AI-related companies.

Nvidia, in particular, has become the hottest stock on Wall Street.

The company, which makes chips used for AI, saw its shares jump 24% on Thursday after it reported record sales.

The stock is now up more than 160% since the start of this year. And its market capitalization is approaching $1 trillion dollars… placing it in rarified air alongside Apple, Google, and the select number of other companies which have achieved that milestone.

So, is Nvidia still a good buy? Probably not.

I like Nvidia, but this entry price is too high. AI is certainly the future. But best to wait for this FOMO (fear of missing out) mentality to die down before looking to buy in.

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Next up… more proof that the Federal Reserve has little hope of successfully battling inflation despite its string of interest rate hikes.

Farmers in Kansas are abandoning their wheat crops because they’ve been damaged by a severe drought and damaging cold.

According to a recent U.S. Department of Agriculture report, farmers of so-called “winter wheat” are on track to abandon 33% of the acres they planted because the weather impacts have been so heinous on the fields.

That’s the highest level of abandonment since World War I, which tells you just how devastating Mother Nature can be.

The impact is certainly not small potatoes, either. Kansas is America’s largest grower of wheat used for making bread, and it’s one of the leading states fueling America’s role as the world’s #5 wheat-exporting country.

Thus, America and the world are now looking at a smaller supply of wheat right at a moment when wheat supplies are already at a 16-year low.

And if that news isn’t bad enough… well, it turns out that six northern counties in neighboring Oklahoma now expect to abandon between 65% and 70% of their wheat crop.

So it is, then, that the weather that Mother Nature has thrown at Kansas and northern Oklahoma can only mean that wheat prices will rise in the U.S. and globally… a fact over which the Fed has no control, since rate hikes are impotent against the whims of Mother Nature.

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Finally, Americans currently see gold as a better investment than stocks—the first time that’s been the case in a decade.

That’s according to a recent Gallup survey, which found that 26% of Americans say gold is the best long-term investment right now, nearly double the 15% who claimed that in 2022.

Meanwhile, Americans who think stocks represent the best long-term investment fell to 18% from 25% last year, the lowest reading since 2011.

It’s not hard to see why that would be the case.

Gold has held up well as the Fed has raised interest rates, while stocks have struggled. Moreover, faith in gold over stocks speaks to the larger worries that the economy is not as strong as the White House would have us believe, and that America’s fiscal situation continues to devolve as Uncle Sam’s debt just piles up higher and higher.

The flip side here is that investors often dive into an asset at exactly the wrong moment. They grow bullish at the top and bearish at the bottom, and thus are buying when they should be selling and selling when they should be buying. There is some truth to that.

So maybe gold does see a pullback and maybe stocks do advance, at least in the short term.

But longer term, America’s fiscal disorder will only worsen, according to the Congressional Budget Office. And that is ultimately bullish for gold. Which is why I continue to recommend that everyone own exposure to it.

That brings us to the end of this week’s digest. Many thanks for being a subscriber. And if you have any feedback or questions, reach out through the contact form on the Global Intelligence website.

Enjoy the rest of your Sunday.