How Much Higher Can Stock Market Climb? | Jessica Inskip

Summary

Jessica Inip, the director of education and product at OptionsPlay and co-host of the Market Maker podcast, discusses the latest earnings releases, stock market outlooks, and the growing role of AI in financial markets. She emphasizes the importance of focusing on AI and technology sector earnings, despite overall market challenges. Jessica also shares insights on the potential impact of the gig economy and the Fed's role in the market, highlighting the opportunities in tech stocks and the transformative power of AI in various industries.

Takeaways

• 📈 Technical analysis of the market shows upward trends with the 13, 26, and 40 moving averages indicating overall market health.
• 💡 Earnings season and AI advancements are potential catalysts for market movement and growth.
• 🌐 The focus on AI and technology sectors is more significant than other industries for future market performance.
• 🔄 Market consolidation is normal and finding support points is essential for continued upward momentum.
• 📊 Earnings revisions and positive quarters suggest a positive trajectory for the market despite some misses.
• 💭 The gig economy and its impact on labor market data could influence the Fed's decisions and market direction.
• 🏠 Housing market considerations and the potential for rate cuts to stimulate supply are important to watch.
• 📉 Inflation concerns and the Fed's balancing act between controlling inflation and maintaining economic growth.
• 🚀 AI's role in the fifth industrial revolution and its potential to boost productivity and economic growth.
• 🌟 The impact of AI on various sectors, including technology, healthcare, and financial services, and its transformative potential.
• 🎧 Jessica's podcast aims to educate the public, especially women and beginners, on financial concepts and stock market workings in a relatable manner.

Q & A

What is the primary focus of the discussion in the transcript?

The primary focus of the discussion is on the trends in the technology sector, particularly in relation to earnings, moving averages, and the role of AI in the markets. It also touches on the broader market outlook, the impact of earnings season, and the potential influence of the Federal Reserve's decisions.

How does Jessica view the trend of the NASDAQ 100 based on her analysis?

Jessica views the trend of the NASDAQ 100 as waning, as it is not hugging the higher end of the band. However, she sees this as a normal consolidation phase before the market goes higher, with a catalyst potentially being the earnings season or developments in AI.

What is Jessica's perspective on the overall stock market performance?

Jessica believes that the overall stock market performance should not be solely focused on the 'Magnificent Seven' stocks. She emphasizes looking at broader participation, such as the S&P 500 equal weight and the Russell index, to get a more accurate picture of market health.

How does the gig economy factor into the discussion of the labor market and Fed policy?

The gig economy is seen as a potential wild card in the labor market. It could provide a different picture of employment that may not be fully captured in traditional data, potentially leading to a cooler labor market than realized, which could influence the Fed's decision on interest rates.

What does Jessica think about the yield curve inversion and its implications for a recession?

Jessica acknowledges the historical correlation between yield curve inversion and recession but suggests that this time might be different due to the Fed's quick responses to economic issues and the advancements in technology that provide more tools for managing the economy.

How does Jessica view the role of AI in the fifth industrial revolution?

Jessica sees AI as a pivotal element in the fifth industrial revolution, emphasizing its role in increasing productivity and transforming various sectors. She believes that AI's rapid development and integration into workflows will lead to significant changes in how we live and work.

What are some potential catalysts for the market to move higher, according to Jessica?

Jessica mentions the earnings season and developments in AI as potential catalysts for the market to move higher. She also suggests that a shift in the Federal Reserve's policy could serve as a catalyst later in the year.

How does Jessica analyze the performance of tech stocks?

Jessica uses a combination of fundamental analysis, looking at earnings and growth narratives, and technical analysis, using moving averages to determine trends. She also takes into account the broader market context and the specific performance of companies within the tech sector.

What is Jessica's take on the impact of AI on productivity and the job market?

Jessica believes that AI will significantly increase productivity and could change the job market by automating certain tasks. However, she also notes that AI could create new opportunities and demand for skills related to its development and implementation.

What are some of the sectors that Jessica sees benefiting from the AI explosion?

Jessica highlights sectors such as cloud computing, cybersecurity, and semiconductors as key beneficiaries of the AI explosion. She also mentions that AI will impact the technology sector itself, as it can help streamline coding and other technical processes.

How does Jessica's podcast contribute to financial education?

Jessica's podcast aims to demystify financial concepts and stock market workings, particularly for those who may be new to investing or find traditional financial jargon intimidating. It focuses on teaching in relatable terms and encourages questions to foster better understanding.

Outlines

00:00

📈 Market Trends and Earnings Discussion

The paragraph discusses the impact of tech earnings on market trends, specifically focusing on the 13, 26, and 40 moving averages. These averages indicate whether the market is rising or falling and act as support and resistance levels. The conversation highlights that although the trend may be waning, it signals consolidation rather than a downturn. The speakers welcome Jessica Inip, an expert in education and product at Optionsplay, to discuss earnings releases, market outlooks, and the role of AI in the markets. Jessica shares her insights on the importance of earnings growth in the AI sector and the overall positive consumer resilience. The discussion also touches on the broader market performance beyond the 'Magnificent Seven' stocks and the potential impact of the FED's interest rate decisions.

05:01

📊 Technical Analysis and Market Participation

This paragraph delves into Jessica's approach to technical analysis, emphasizing the use of 13, 26, and 40 moving averages on weekly charts to gauge market health. She explains that these averages represent one, two, and three quarters, respectively, and their upward slope indicates positive earnings growth. Jessica notes that while the NASDAQ 100 has seen a significant rise, some consolidation is normal. She also discusses the importance of broader market participation, comparing the S&P 500 equal weight index favorably to the NASDAQ 100. The conversation then shifts to potential market narratives supporting bullish sentiment, such as the gig economy and the possibility of a FED pivot. Jessica also shares her thoughts on the implications of the increasing number of people holding multiple jobs, suggesting it could indicate a more resilient consumer base.

10:02

💡 The Yield Curve and Economic Indicators

The discussion in this paragraph revolves around the yield curve's inversion and its traditional indication of an impending recession. However, Jessica suggests that this time might be different due to the Fed's quick response to economic issues and the use of technology in resolving banking system crises. She also considers the impact of AI on productivity and labor supply, and how these factors could influence the Fed's decisions. The conversation touches on the potential for a rate cut and its implications for the housing market and inflation. Jessica provides a nuanced view of the economic indicators, highlighting the complexity of interpreting current market signals.

15:03

🌐 The Fifth Industrial Revolution and AI's Role

In this paragraph, Jessica introduces the concept of the fifth industrial revolution, characterized by the rise of AI and machine learning. She explains how these technologies build upon previous industrial advancements and are poised to transform various sectors. Jessica emphasizes the rapid pace of AI development and its potential to increase productivity significantly. She also discusses the challenges of integrating AI into legacy systems and the need for guardrails to ensure ethical use. The conversation explores the future implications of AI, including the potential for virtual assistants and the shift in valuable job skills, such as coding. Jessica argues that AI is still underestimated and has vast potential for growth and innovation.

20:07

🚀 Tech Stocks and AI's Impact on Subsectors

The focus of this paragraph is on the performance of tech stocks, particularly in relation to AI. Jessica references a Morgan Stanley report that suggests tech earnings have historically been underestimated, leading to significant earnings surprises. She discusses the potential for further growth in AI-related stocks, including those in the semiconductor industry. Jessica also highlights the importance of cloud computing and cybersecurity in the AI ecosystem. She mentions the strategic moves by major tech companies to capture market share in AI and the opportunities for companies like IBM and Google. The conversation underscores the broad impact of AI across various technology subsectors and the potential for continued innovation and growth.

25:09

🎙️ Launching a Podcast for Financial Education

Jessica shares the story behind launching her podcast, which aims to educate the masses on financial concepts in a relatable manner. She explains her motivation to shift from traditional financial roles to a platform where she can speak freely about investing. The podcast, co-hosted by a friend, focuses on making complex financial topics accessible, especially to women and those new to the world of finance. Jessica discusses the importance of understanding fundamental concepts like the role of the FED, yield curves, and inflation before engaging in specific investment strategies. She expresses her satisfaction in helping listeners have 'light bulb' moments and emphasizes the podcast's goal to empower individuals through financial literacy.

30:09

🔗 Connecting with Jessica's Podcast

In the final paragraph, Jessica provides information on how to access her podcast for those interested in learning more about finance. She mentions that the podcast is available on all major podcast platforms, including Spotify, Apple Podcasts, and Good Pods, and also on YouTube. Jessica encourages listeners to visit their website, marketmakak herp podcast.com, for additional resources and episode equity. The conversation concludes with gratitude for the opportunity to share her insights and a reminder for viewers to follow her work across platforms.

Keywords

💡Tech Earnings

Tech earnings refer to the financial profits reported by technology companies. In the context of the video, it's emphasized that the performance of tech earnings is a significant factor driving market trends, particularly the 13, 26, and 40 moving averages which are used to analyze stock price movements. The discussion indicates that a strong tech earnings season or positive surprises can act as a catalyst to push the market higher.

💡Moving Averages

Moving averages are technical analysis tools used to smooth out price data and identify trends in securities. The video specifically mentions the 13, 26, and 40-day moving averages, which help to determine whether a stock's price is increasing or decreasing over specific time frames. These averages also serve as support and resistance levels, indicating price points where the stock may reverse its direction.

💡AI (Artificial Intelligence)

AI refers to the simulation of human intelligence in machines that are programmed to think and learn like humans. In the video, AI is highlighted as a key area of focus for market growth and innovation, with the potential to significantly impact various sectors. The discussion suggests that AI's role in the market is growing and could be a positive narrative for the future.

💡Earnings Season

Earnings season is the period during which publicly traded companies release their financial results for a given quarter or fiscal year. It is a critical time for investors as it provides insights into a company's financial health and can influence stock prices. In the video, the speaker mentions that earnings season can act as a catalyst for market movement, with positive earnings often driving stock prices higher.

💡Market Outlook

A market outlook refers to an expert's predictions or expectations about the direction or trend of financial markets. It includes analysis of various economic indicators, corporate earnings, and other factors that might influence investor sentiment and asset prices. In the video, the market outlook is discussed in relation to the performance of technology stocks and the potential impact of AI on market trends.

💡Support and Resistance

Support and resistance are terms used in technical analysis to describe price levels where buying or selling is likely to occur. Support is a price level where a stock is expected to find buying interest, preventing it from falling further. Resistance is a price level where selling interest is expected to overcome buying interest, preventing the stock from rising further. In the video, these concepts are used to analyze the movement of stock prices and predict future market behavior.

💡Gig Economy

The gig economy refers to a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. It often involves flexible, temporary, or independent work, usually facilitated by digital platforms. In the video, the gig economy is mentioned as a factor that could influence the broader market and the Fed's decisions, as it represents a shift in the labor market that may not be fully captured in traditional employment data.

💡Fed Pivot

A Fed pivot refers to a change in the monetary policy stance of the Federal Reserve, typically in response to evolving economic conditions. This could involve changes in interest rates or other measures to stimulate or cool down the economy. In the video, a potential Fed pivot is discussed in the context of how it might be influenced by factors such as the gig economy and AI's impact on productivity.

💡Yield Curve

The yield curve is a graph that plots the interest rates of bonds with equal credit quality but differing maturity dates. It is used to analyze the health of an economy, with the shape of the curve indicating expectations for future economic growth. An inverted yield curve, where short-term rates are higher than long-term rates, has historically been seen as a predictor of recessions. In the video, the yield curve's inversion and reversion are discussed in relation to potential economic indicators.

💡Inflation

Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks attempt to limit inflation and avoid deflation to keep the economy running smoothly. In the video, the discussion of inflation is tied to the Federal Reserve's policy decisions and the potential impact of AI and other factors on the economy.

Highlights

The discussion focuses on the impact of technology earnings on moving averages, which reflect market trends and act as support and resistance levels.

The current market trend is considered waning, but this is seen as a period of consolidation rather than a decline, with the potential for a catalyst like earnings season to push the market higher.

AI and technology stocks are pivotal to market focus, with demand and earnings within this sector viewed as particularly important.

The overall market performance may be skewed by a few large stocks, with broader market indices like the Russell showing a flatter performance over the last two years.

Market participation is key, with technical indicators like the S&P 500 equal weight showing more positive positioning than the standard S&P 500.

The NASDAQ 100 has seen a significant run-up since the beginning of 2023, with the potential for a pullback on the horizon.

The use of moving averages on a weekly basis provides a qualitative quantitative approach to technical analysis, with the 13, 26, and 40-week averages used to gauge market health.

AI is expected to play an increasingly significant role in the markets, with productivity gains potentially leading to a shift in the labor market and Fed policy.

The gig economy may present a wildcard in the labor market, with data on its impact still limited, potentially affecting Fed policy and market sentiment.

The yield curve's inversion and subsequent reversion to normal may not necessarily indicate an imminent recession, as past patterns suggest, due to rapid responses to economic issues.

Inflation remains a concern, with the Fed's actions and statements suggesting a continued focus on reaching the 2% target, despite current rates remaining above 3%.

The potential for the Fed to cut rates is discussed, with the implications for growth and market performance hinging on the underlying reasons for such a move.

AI's impact on productivity and the potential for it to transform various sectors, including financial services and healthcare, is highlighted, with the expectation that it will streamline and enhance many processes.

The importance of cybersecurity and the need for innovative solutions in this area, as AI and technology continue to advance, is noted.

Jessica's podcast aims to educate and demystify financial concepts for a broader audience, particularly focusing on making complex topics more relatable and understandable.

The podcast covers a range of topics from basic financial education to current market updates, providing a comprehensive resource for those interested in finance and self-directed investing.

Jessica's shift from working for larger brokerage firms to her current role reflects a desire to communicate more freely and accessibly about finance and investing.

Transcripts

but as soon as we start ramping up into

Tech earnings that's what's driving that

13 26 and 40 moving averages which

essentially just shows the trend is is

it going up is it going down and it acts

as a means of support and resistance as

well and that right that right now says

the trend is waning because it's not

hugging that higher end of the band but

that just means a little bit of

consolidation we'll find some support

then we just need a catalyst to push us

higher and normally that catalyst is is

the earning season or somebody could

tweet something who knows well we're

joined today by Jessica inip she is the

director of education and product at

optionsplay and the co-host and founder

of the market maker podcast we'll be

talking about uh the latest earnings

releases as well as stock uh Market

outlooks and uh how AI is going to be

playing a bigger role in our markets

welcome to the show Jessica thank you

for being here yeah absolutely it's a

pleasure to be here glad we can connect

and excited for today's conversation uh

thank you very much I've seen you on um

CNBC and Yahoo and yeah you you were

great on other media so I wanted to get

you on my show so thanks for being here

you've also got your own show which we

can uh chat about towards the end of the

um uh interview so stay tuned to learn

more about uh Jessica's uh podcast as

well and uh I want to talk first about

earning so uh a lot of disappointments

from yesterday we're speaking on

Thursday today but the markets didn't do

well yesterday we have a bit of a bounce

today um are you concerned about uh

earnings missing a lot of estimates this

quarter no not necessarily because the

focus is more more on AI and technology

and I want to make sure that I see the

demand there and earnings within that

sector specifically so that is okay

whereas if I see earnings misses and

more and retailers and things like that

that all goes into the broader picture

of the all overall macro environment

where I want to see what the FED is

pulsating so meaning when we go through

earning season not only is it are we

still seeing earnings growth so for

example when we're we finalized q1 and

now getting into Q2 getting those q1

earnings we've had earnings revisions

down but it's not as much and that's

normal so that's a positive sign and

earnings have also bottomed as of last

year since we have positive quarters and

we're still on that trajectory of

positive Porters that still is good so

overall I focus more from the earnings

perspective on that growth picture in

the AI narrative which is seemingly

positive and then I just want to see the

broader participation and then earning

can give us an insight into company's

Health overall consumer spending and

awareness and that that to me still

seems positive we keep saying they're

hanging in there the consumers and they

they certainly are resilient is the word

yeah and certainly you've heard this

before but if you take away the

Magnificent Seven stocks I think it's

maybe just five of them now uh the

broader Market hasn't done as well so

even just looking at the Russell it's

been pretty much flat for the last two

years um bit of a rebound the last year

so how would you how would you respond

to the argument that the overall stock

market isn't really doing that great

it's just a few stocks and you have to

be it's an environment to be really

selective right now yeah so I think if

you're looking at the earnings it we can

pull data and I think paint any picture

we want which is so interesting with the

market mechanics but I I do agree in the

sense from the earnings view but we have

to remember that the Market's

forward-looking and when we look at

broader participation that's when I

focus more on a technical view so

looking at the S&P 500 equal weight for

example that is definitely more

positively positioned from that Ford PE

ratio than the S&P 500 and same with the

russle and so I see broader

participation as in there's demand for

those Securities looking at the

functions of supply and demand versus

the solely just that Magnificent Seven

or that narrow rally that we saw within

the NASDAQ 100 having that natural

rotation as is definitely good now

within the Russell I know earlier in the

year and I was inclusive of this or the

famous Tom Lee coming in and saying

value value value that of course is with

the indication that the FED is going to

cut rates those smaller businesses that

dep are a little more Capital intensive

or need those funds are going to

positively benefit from a less

restrictive Fed so that I I there is

certainly risk there depending on what

the FED does but we still have a lot of

data until we till we get to that point

and really understand it but I still I

see this

as I don't see what we're in this

euphoric phase it's just this natural

rotation that we're having and that's

healthy and I think that's a good sign

and I've really I'm I'm pounding the

table on AI I have for quite some time

and I know we'll talk about that in a

little bit as well yeah we will um let's

talk about the NASDAQ so um a big runup

since all the way extending to the

beginning of

2023 and um I know you've you know

analyzed Trends a lot are we due for a

pullback Jessica yeah so I like to look

at the NASDAQ 100 rather than the NASDAQ

Composite just because the NASDAQ

Composite is a little more diverse now

so if we want it but it tends to leaps

so from a technical perspective I have a

very different charting view than most

people but it it's because it's a I like

to call it qualitative quantitative if

you will okay so I I use the 13 26 and

40 moving averages on a weekly basis i'

normally look minimum to two to two to

three years on a chart and the reason

why I use the 1326 and 40 if you look at

that time frame 13 weeks represents one

quarter 26 is 2 and then 40 is three so

since we look at the markets quarterly

we kicked this off stop talking about

earnings I want to look at the charts

technically from that same type of lens

so if you look at my charts you'll see

the 13 26 and 40 moving averages I want

to see them very simple at this point

just sloping upwards if they slope

upwards that means pric is increasing on

a rolling quarter basis and that is good

indicative of earnings without even

looking at the fundamental aspect I

still see that on the NASDAQ 100 it's

gone a little far and that's okay so on

top of that what I do is I add a simple

actually first technical indicator I

ever learned over a decade ago Ballinger

bands it's it represents two standard

deviations from a price so if you take

the math behind it and you have an

upwards Trend you can utilize that for

strength of a trend because it's hugging

the higher end of the range that's

waning a little bit so consolida

is absolutely normal before we go higher

but if we pull when we started earnings

and what's really accelerated us into

those rally modes it tends to be that

ramp up as we consume that data but as

soon as we start ramping up into Tech

earnings that's what's driving that 13

26 and 40 moving averages which

essentially just shows the trend is is

it going up is it going down and it acts

as a means of support and resistance as

well and that right that right now says

the trend is waning because it's not

hugging that higher end of the band but

that just means a little bit of

consolidation we'll find some support

then we just need a catalyst to push us

higher and normally that catalyst is is

the earning season or somebody could

tweet something who knows what will

happen with AI um we okay so besides Ai

and potentially a Fed pivot later on in

the year uh which we'll talk about what

other narratives are there that could

support this bullish sentiment going

into the rest of uh Q you know Q3 and Q4

yeah so I think there is certainly a lot

with the domestication that we have of

Industrials I think that could certainly

serve as a bullish narrative and also

the gig economy that's something we

haven't talked about I we talk about it

often but there actually isn't a lot of

data on it so I I try to do my research

and dig down through these rabbit holes

and the FED hasn't done a research

report or have the good enough data to

do some analysis since it it was I I

don't have the exact dat off top of my

mind I apologize but it was in the early

2000s area so it's been too much time

but now the gig economy is so much more

prevalent meaning it's all related in in

a way besides I think it's hard to say

besides fed pivot and AI because I think

AI increases productivity which gives us

more balance in the labor market which

could lead to a Fed pivot but then also

the gig economy is could be a different

picture of the labor market that we're

not seeing that could also lead to Fed

stance so it's this big puzzle that

comes together but the gig economy could

be the wild card because we don't have

the exact data of when that filters into

the employment picture because if if you

have that you may your side hustle could

be 1099 and a means of income so you're

not collecting unemployment because

you're not eligible for it and if you're

not collecting unemployment and you're

not eligible for it we're not going to

see you come into the data but if you

lose your W2 income versus your side

hustle or gig economy or those

Freelancers that has a much larger impct

impact on your expenses than the W2 or

then you get what I'm saying so that

that right there could be a bigger

bigger issue that would emerge meaning

we might have a cooler labor market than

we realize which would lead to more to a

a a more likelihood of a Fed pivot and

cutting of rates but it's hard to see

that and that to me is

our something I'm watching it's the

biggest risk but it could also be the

biggest Catalyst um I've seen reports

that uh the US economy has seen the most

number of people holding multiple jobs

at the same time I think you've alluded

to this just now a lot of economists

I've talked to don't see this as a great

sign though Jessica because if you need

multiple jobs you're clearly not doing

as well as you could and the broader

economy isn't supporting that kind of

wage growth that many people would like

to see which is why people need multiple

jobs uh what do you think about that

yeah I mean it's some instances so it

depends on what that is so if you have

multiple W2 income I would argue that

but if you hold multiple as in that 1099

income or you're going into freelancer

that to me is a different type of

consumer base that we have right now

it's a different type of economy jenz is

a completely different animal they are

entrepreneural spirits and they they

don't they're just very different they

consume content differently they aren't

necessarily looking for that normal

corporate job that my generation was

used to and perhaps they saw what we

experience you Millennials are the most

educated generation they also have the

most debt they have the least assets

whereas the entrepreneurs and anything

that could come out of that did better

and they have more easier access to that

due to technology I mean even thinking

about the great financial crisis in 2008

you lost your job you couldn't go you

know get sell affiliate links or get

things like that with on the social

media platforms you couldn't go drive

for Uber you couldn't do these things so

that creates more of a resilient

consumer so I could I could definitely

argue it both ways if you don't have

enough to eat to meet your ends meet and

you have to get another job to support

you that is absolutely bad and I would

see that terrible however if you're on

the younger generation side where you

are on this financial literacy train and

the intent of you getting another job

isn't for W2 but to create a the word is

side hustle for yourself then that

that's a not a bad thing at all yeah

Millennials have pretty much everything

going for them now except homes but

that's a topic for a different

discussion that's so true um how do you

feel about the yield curve having

inverted and then now it's rein verting

if you take a look at just how it's

behaved throughout history every not

every single time but in most instances

in the past whenever the yield curve I'm

taking the 10-year MTH as a two-year as

an example whenever the yield curve has

um inverted to negative territory a

recession usually follows a few months

after that um now the yield curve has

tended to had to reinert back to zero

before a recession officially hits we're

almost there it's almost back to zero uh

is that cause for concern for you at

least as an indicator that a recession

is coming yeah you know it's hard to

argue the the data there and I believe

the average time is 13 months when it

first inverts before we head into that

recession territory but I think it makes

sense to take a step back and I I hate

saying the words this time is different

because I I just I absolutely despise

that but I'm saying it now so uh

thinking about what the yield curve

inversion causes is that credit crunch

or that crisis there or the FED just

moves too far too fast and they tip us

into a recession because they affect the

front end of the curve and what I'm

thinking about what happened is is we

had that with svb and we fixed that in a

weekend I mean I didn't do anything but

the FED fixed it in a weekend yeah

and that's different than past

recessions we've had some time aside

from covid and it it's we do have more

technology we do have access to data the

FED is being more transparent than usual

I think Powell even said this in one of

his earlier speeches where the FED is

really shifting their market dynamics

and I love reading their studies when

you pull them out when that they they

really suff so quietly sometimes but one

of his statements was you know the

market is anticipating our every move

and I chuckled I said well the Market's

forward looking we always anticipating

everyone's every move but it was

something that clicked to him and the

person who is making the decisions about

the rates it's important to take his

mindset aside from my own because he's

going to have the bigger impact meaning

I I think this time is different because

we have had some

negative negative connotation negative

things happen within the economy within

the banking system and they've been

resolved really really quickly and now

since we've have this restrictive

environment the FED has a toolbox so

it's possible that we'll hit that

recession territory but if that happens

I really think that the the fed's gonna

they will step in very quickly and now

they can and that is definitely a good

sign but everything points back to AI

increase in productivity if you started

this hiking cycle with saying we've got

an overheated labor market and all of

the sudden you have this new technology

that increases productivity and we have

a labor Supply issue and now all of the

sudden we have immigration come in I

really think Powell should just play the

lotto at this point is he keeps having

things work for

him he might say that a lottery winning

is only transitory like inflation is oh

there we go speaking of inflation um is

that are we heading down towards 2%

because the data hasn't been indicating

a steepening trend downwards right we're

still above 3% um for both headline and

core and uh I'm looking at the CM fed

watch tool there isn't a significant

probability of a cut even by June I mean

it's it's over 50% but it's not

significant so what's your take on

inflation and ultimately what the fed's

going to do yeah that was interesting we

got the ECB data there was their their

flash numbers and theirs came down

considerably and they also had some

surprises in January and February so

when we get our information perhaps

especially with the Manu manufacturing

that we got yesterday it would be a

little better I don't like being in the

business of predicting that we're going

to get there but what I do want to

consider is his stance and what he's

looking at is he balancing credibility

or what is the give and take at this

point so he does consistently say we're

on emission to 2% I like to call it

Powell for swifties because if you're a

Taylor Swift fan I apologize I'm

bringing it to this but you analyze

everything that that woman says to

understand because they she just caters

to those stem girls we do the same thing

with fed Powell the way that he says

something to indicate what he's going to

do he has consistently said 2% but my

question is what is he willing to give

up in order to get to that place and I

see him

shifting language just ever so SL

slightly which is why I like to relate

it to that

analogy it's a marathon or yeah it is a

marathon we're at that last leg that

last leg perhaps might be the hardest I

don't run a marathon but that's what

people say I'm more of a weights person

but I I that to me is is the hardest

part but we're still on the right track

and he said on the last meeting he wants

to see continuation of the trend that

we're on which means to me that he'll

cut as long as he thinks we're getting

to that 2% and what I think The

Balancing Act and the chess game that

has to happen here he made that

statement that he feels like rents is

going to because of the lag effects that

you're very aware of rents are going to

come in to that data and that's what's

going to help contribute to inflation

actually coming down because we might we

we're seeing that service and perhaps

goods are normalizing at this moment so

services to me is is the risk as they

have been with stickiness but if rents

comes down which really hits people's

expenses that could be really good for

the inflation picture he just didn't

know what the timing was but The

Balancing Act is this housing Supply

issue that we have arguably you're I

mean I I do own a home and I have a 3%

mortgage rate there is no way I'm

selling it I'm going to live here

forever because I don't why would I I'd

end up cost me 40% more to buy the home

that's for sale across the street in my

neighborhood that just logically doesn't

make sense and then you multiply people

like me plus the older generation that

has most of the wealth until they

downgrade which I'm sure will happen an

interest rate cut arguably could help

the inflation situation by creating a

housing Supply well okay

so we're not going to talk about housing

too much but would you be interested in

selling your home suppose mortgage rates

come down to maybe not as close to 3%

but maybe closer to 5% or 4% and

assuming the value of your home has

appreciated significantly you're going

to lock in your capital gains yes you

might pay a little bit more and morgage

uh uh expenses from buying a home across

the street but you're still locking in

gains would you consider that if

mortgage rates come down a bit

more yeah I mean I I personally I'm not

looking to move but if I was absolutely

because that Balancing Act makes sense

okay and and I think that will certainly

help so which which argues could we

could make the argument there that

cutting interest rates getting that

tenure down a little more will

definitely definitely help the housing

market for that reason alone yeah it'll

soften some assets I've heard the

argument as well that the fed may only

cut when he sees signs of a Slowdown in

the economy or when the unemployment

rate goes up and so cutting may not be

actually indicative of growth it could

be indicative of the opposite which

would signal perhaps a correction in the

stock markets if he's cutting for bad

reasons right yeah that's such a great

statement it's the why there's I get so

many questions on that do you so if the

fed's going to cut Jessica are are the

markets going to Surge well it depends

on the why why are they cutting

get absolutely very beautiful Point

speaking of Taylor Swit I think her AOS

tour generated five billion dollar for

the for the economy could be funny if

that's the reason fed's the fed's not

cutting it's because Taylor Swift is you

know actually contributing to growth um

but I digress um okay there's studies on

that there's studies on that okay I'm

sure you've looked into those studies um

so ultimately um okay let's talk about

AI now you uh you submitted a piece to

me thank you for that and you've talked

about how we're currently in the fifth

Industrial Revolution tell us about your

thesis

there yeah so there has

been so thinking about the revolutions

that we've had it's

compounding where if you look at the

movement that we have had when we just

had railroads or water steam and

mechanization and those assembly lines

they were building on one another that

ultimately grow in compounds so going

back to the 1800s I don't think we have

to go through them all individually but

perhaps the 2000s there we had a dotom

bubble in the 2000s is because we had

companies we did not understand somebody

put.com behind their company name

everyone was excited about the internet

from a valuation perspective it was very

difficult to valuate because we didn't

understand the revenue drivers that were

there fast forward to today we use the

internet in the worldwide web absolutely

everywhere in every single vertical with

every way every shape and formed which

is proves that point of compounding

2010s is when we got to that networking

and machine learning meaning now we're

at this different place where has

compounded where the framework has been

built via the Internet computers

electronics and introducing Automation

and now we have machine learning and now

we have extremely smart now we're

getting in the 2020s of self-learning

cognitive collaboration of machines and

there is so much that that can do was

coding is being taken away and that l

language will soon be human I think it's

interesting it used to be so valuable to

have the skill python on your resume

that's of the shift and we have to shift

with those revolutions meaning there's

this wonderful piece that I sent to you

or the screenshot from Morgan Stanley

where they were going through these

previous revolutionary periods and it

was 38% that analyst weren't projecting

because it's difficult to evaluate but I

think the difference of difficult

evaluation vers versus the 2000s and now

is these are mature companies not with

clear paths to profitability not

companies that are in a garage with DOT

trying to figure it out which we know

Apple started there at some point but

this this is different for that reason

alone and we are seeing real demand

which translates to real Revenue yes a

lot of it is forward-looking and there's

the supply chain issues and things of

that nature but there is so much

underestimation I believe within this

entire entire AI because it also moves

so fast once I feel like I learn how to

do something within AI there's a new

Plug-In or feature that I have to figure

out and that is good but that also means

that we have we haven't even tapped into

it

yet can you give us a glimpse of the

future I think most people watching the

show who aren't content creators or

maybe work in finance professionally

haven't really integrated their workflow

with AI yet um think about if you're

working in an office and you've got

Legacy systems that are in place you

don't have to switch right away and so

most people don't use AI as much as um

some others and so uh it's difficult for

many people to understand exactly why

there's this big hype around it can you

just give us a sense of how our lives

could change in the next 5 to 10 years

absolutely so having a your own virtual

assist would be a piece of it but having

guard rails as well where you can make

your own type of collaborative type of

experiences so think about let's go real

back in time if you're a member on

Microsoft products I'm also advocating

for this if you remember clippy yeah I I

I knew you were going to say that as

soon as you said

Microsoft clippy I loved clippy I really

think they should be bring clippy back

that's where copilot should be be be

amazing um nonetheless I digress but

clippy help that that was a new

iteration within a magical tool that we

had where you could instead of a

typewriter we're writing on the computer

it's saving time that's why it's a

productivity increase so if we moved

from a typewriter to a computer to

utilizing a Word document you don't have

to erase things you just backspace it so

now we're very quick and then if you

don't understand how to use it oh you've

got clippy who can help you when you

search and ask but you have to be very

specific within the commands clippy is

not a person so now there is a tool

where if you want to learn think about

it integrated onto your computer and

there are versions of that already and

you could set that up if you know how to

integrate very well where you could just

speak to someone that could go through

your data and understand what's needed

there or you could say I have all of

these files on my desktop and you could

do this today if you want can you please

find any research that I have done on

artificial intelligence put that

together on a Word document and then

summarize the bullet points for me that

is incredible and that that is a very

small use case there's Automation and

triggers where you can have it do one

task learn to do another you can give it

guard rails and then it can train itself

so where that's where AI is right now is

on that inference and acceleration piece

where it it you teach it to train itself

which is scary in its own way shape or

form but if you think about what it is

it mimics human behavior so so even for

I was working on some research yesterday

I had it create an infinite um and I got

this from somebody uh I I wish I

remembered his name so I can give him

credibility right now but I I'll send it

to you afterwards called it the infinite

focus group where I had chat gbt give me

uh for something I was looking to work

on a list of people that would be in

that focus group and it was my podcast

and I said okay what are they going to

why would they want to listen to my

podcast give me their demographic where

they are their family things like that

then I said hey very humanely very

humanely it be nice to to chat GPT I

want you to inject some truth serum in

them and we're going to have a

conversation and I want to know what

their trepidations are really that they

wouldn't tell in in front of that Focus

Group in front of people and then I got

a very different response which turns

into marketing gold so meaning there's

just so many use cases that you can

utilize purely from its implications

today but it it can analyze

very very quickly which is such an aid

to productivity and I believe there was

uh this this study was about six months

ago the people who use AI tools right

now are 40% more productive and that's a

very small use case of people so imagine

when that's more widely adopted and put

into those bigger corporations which is

in the works that takes some time if you

ever worked on the procurement side it

takes a while while to to get those

things across the line but once they do

then we're going to really see some

changes ultimately investment

appications yeah I mean have we missed a

boat on companies like Nvidia perhaps we

haven't gotten in but are the

fundamentals still there for

growth I I think so I mean there is

definitely some demand Po and they're

constantly constantly innovating and I

think that is good to see their uh uh

the uh their their blackw chip that

looks promising they also another one

that could integrate directly onto your

computer so now your computer is AI that

the cooling of chips so they're taking

all of their problems and they're also

looking to solve them as well and so

it's not just one product that is

necessary and also the AI pool is a

really big pie and we have a sliver of

that pie which means there's still

market share to go around there's still

lots of innovation that's needed and as

long as they're still innovating then I

do believe that there's still

opportunity there well you've done

actually some calculations uh you've you

basically have a table of tech stocks

and it says here the average of every

stock mentioned has beat earnings by

32% and um the conclusion is based on

the underestimation average we have

another 11% on average of earning

surprises to the already revised higher

can you just tell us walk us through

what you did

there yeah absolutely so that was based

on the Morgan Stanley report where they

said the earnings estimates were

constantly beat for previous Evolutions

or revolutions if you will so going back

to that do area that was about

38% so if we're at and this so I used

the 32% is including penist because they

were an early adopter I want to take

that out because that was a skew of aund

or two 200% and that that just Skuse the

data so um if you take that out we've

got about another 11% focusing just on

AMD Nvidia Microsoft Google meta and

Amazon so that that's where that came

from since those are 177% all right now

and if the average is a 38% surprise

yeah the difference there is 11% of

growth ultimately which Subs sector of

tech would benefit most from the AI

explosion besides let's say

semiconductors yeah so I actually still

like Google Amazon is just popped up on

my list as late um because of the

different touch points that are there so

Google was my first pick a while ago

because when you look at how to build a

large language model they had most of

the touch points and what I find very

interesting is the VC funding and I I

don't know if you've um seen any

research on this but they basically fund

themselves in a way it's this circular

Capital as in they're investing in those

companies that have ai and they give

them Cloud credits and since they're

investing in them then they capture the

revenue on it as well so it's like

circular Capital within that way the

major ones are doing that but and and

all of them require Nvidia which I find

very interesting if you have the cloud

you know you have to have so either

you're going to pay that really high

price point for the Nvidia chip or

you're going to use something that has

Cloud that already buys that Nvidia chip

that you're going to need for those

large language models so there's lots of

solutions that are there those are the

obvious but I think it's going to shift

so we start with building those models

that is that that that starting point

the infrastructure and then it's the

implementation so those that I think are

going to emerge are the ones that take

the headwinds and make them Tailwinds so

now that we've got this grid issue

there's opportunity there cyber security

is going to be extremely important

opportunity there the cooling that we

need it requires a lot of Commodities

that's opportunity I I flagged IBM uh I

feel like that was about yeah that was

last

year

yeah um IBM I think is also a really

good opportunity because the way that

they've researched Watson X they they've

had some earning surprises but they also

have a lot more demand and that just the

increas is is amazing so besides just

the semiconductors there is a lot of sub

seor s that will fees out really really

well for AI but I think the biggest

sector that's going to have an impact on

AI and this not for the reasons that you

think is technology meaning because it

can write code itself it's going to

streamline technology even more so not

just AI itself it's the implementation

because now I'm looking into the

implementation into Financial Services

into Healthcare and and with the largest

data set but the largest data set is in

fact technology I I know so I I know

Engineers are working on ways that AI

can help us code in English in plain

English which would be a complete Game

Changer because you no longer have to

learn a language anybody can code uh

that would really re yeah that would

really change things speaking of jobs

that could be taken away from AI I hope

podcast hosts isn't one of them um and

that leads to our next discussion you

have a podcast yourself so you know not

a robot can't replace Jessica and your

co-host uh at least not yet tell us why

you launched your podcast and what

that's all about yeah absolutely and

thank you for asking I I sincerely

appreciate that so I I've worked in

finance now for about 15 years which is

unbelievable to me and I made this

really big career shift never forget the

day February 22nd of 2022 where I uh

stopped working for the bigger brokerage

firms and I I work for a vendor called

options play and that allowed me the

opportunity to not be constrained by

Financial licenses and for lack of a

better word say whatever I want sure so

so uh my friend I've always taught her

about self-directed investing but

obviously you can't talk about that on

social media when holding those type of

licenses that I did so I'm I'm no longer

licensed voluntarily and she had this

idea that said hey Jessica every time

you tell me something I tell other

people and I know more people can

benefit from this and on top of that

I've been the first female in a lot of

places

and where I find that the investing Gap

is derived from it's not

that it yes it is an oversaturated

Market with men but men have to talk

about stock market do not if you ever

meet a a Wall Street bro as they call it

they don't they don't shut up but what

happens when they try to explain it to

you it's in relatable terms not to me I

don't know anything about football and I

don't really care about it I I I don't

get it because it's not my language and

so that's what our podcast is is it

shifts it from that type of language to

just something that's a little more

relatable to women on the the mass and

he she's the as well anyone is is here

to listen but we break down how the

stock market works in those type of

terms so I teach her I she says that I

made the biggest risk because I gave up

my licenses and talk about it but I

think she took an even bigger risk

because she sits there live and say is I

don't understand how this works break it

down again and it takes a lot of Courage

for someone to say I don't understand

that I don't understand that but the

results been and all of our feedback is

thank you for asking the questions that

I'm too afraid to ask I finally get how

it works and it's been so rewarding not

only getting that feedback but watching

her progress even we did a recent

episode on how to lock in higher rates

using a CD ladder and using treasuries

and things of that nature but before we

even and that's the first time we

physically placed a trade because it's a

self-directing investing education

podcast that was episode 31 she needed

all of that primer beforehand to

understand who the FED is what they do

what an inverted yield curve is even

what the treasury is with supply and

demand and the debt ceiling and and all

of that and understanding inflation to

get to that point as to why that's

needed and I just love those light bulb

moments so if you tune into to that I

know that was a long answer so I

apologize corrupted your friended now

all that all she's going to talk about

at dinner parties is the fed and then

inverted y curves and CD ladders so yeah

that it's possible yeah you've changed

her life For Better or Worse who knows

um but certainly we'll tune into that uh

that is so but but I mean presumably

this could be for anybody who is

interested in finance who is just

starting to learn right it doesn't um it

sounds like you're just educating the

masses about basic Financial

Concepts yeah we still do stock market

updates absolutely absolutely so so we

bring it all together so this is how it

works but here's also how it works today

and then also what's happened in the

past so it's definitely ramping up there

and it and she comes with questions so

there was a uh question that she had

about dark pools and how they work so we

went into detail and we talk about dark

PS we so it it's definitely relevant to

today we haven't gotten any technicals

or anything too deep just yet but if you

want to learn how the stock market works

from start to finish that's absolutely

the in the intent of it okay well uh

where can we uh where can we find this

podcast and follow your work on other

platforms as well yeah thank you for

asking so it's available everywhere that

a podcast is streaming on your favorite

podcast app I probably can't even name

them all so it's on all the major ones

of course Apple

Spotify uh good pods even Google podcast

just went away so you can find us on

YouTube music and we do also upload to

Youtube We haven't put our RSS feed into

YouTube music because we want to keep

the video there so know that so I

definitely recommend the best place

would be Spotify or good pods but we

also have a website it's called Market

makak herp podcast.com and there every

episode we include what's called episode

Equity where if it needs a supporting

article we'll put that there anytime

that we have additional takeaways that

goes into our blog which is called our

dividends we have lots of fun with the

names you can see okay

okay yeah I'll definitely will put the

links in the description down below so

make sure to follow Jessica and her work

there thank you very much for your time

we'll speak again soon yeah thank you so

much it was a pleasure I really enjoyed

it yeah thank you for watching don't

forget to like And

subscribe