“The stock market rally so far this year seems based largely on speculation rather than fundamentals.
“Canada’s money supply continues to have an uncanny knack for calling the big trends in inflation. The broad measure peaked way back in early 2021 at its fastest rate in four decades. Lo and behold, Canadian inflation peaked about 18 months later at its own four-decade high. Money supply growth has all but stalled in the past year amid the rapid-fire monetary tightening, pointing to a much deeper pullback in inflation in the year ahead.
“Big Tech is now engaged in an AI arms race developing their own ChatGPT-like chatbots and incorporating AI into their search engines. Semis/hardware are likely beneficiaries because the training and running of large language models like ChatGPT requires significant computing power. In addition, cloud software analytics also benefit from the increase in data volumes along with cybersecurity as digital threats become more sophisticated.
In big tech, the picks are Microsoft, Alphabet, Meta, Apple and Baidu. In semiconductors and hardware, it’s NVIDIA, ASML, TSMC and Arista Networks. In software and analytics, the selections are Adobe, Shutterstock, NICE systems, SAP, RELX and Palantir.
Ultimately its humans who will lose.