Category Penny Stocks

Walmart should “eat” tariffs … can the average U.S. consumer absorb them? … earnings estimates don’t support stock prices … Jeff Clark says lower prices are coming … but looking farther out, AGI stocks are where we want to be

We’re anticipating a barrage of new trade deals, as well as a lower tariff on China.

But until that happens – and potentially even after that happens if the blanket 10% tariff remains – retail prices and consumer spending are on a collision course.

Will it be a fender bender or complete totaling?

Last week, we reported on Walmart’s CFO John David Rainey’s statement that the 30% tariff on China is “still too high.” He suggested price increases are on the way:

We’re wired for everyday low prices, but the magnitude of these [tariff] increases is more than any retailer can absorb. It’s more than any supplier can absorb.

And so, I’m concerned that the consumer is going to start seeing higher prices. You’ll begin to see that, likely towards the tail end of this month, and then certainly much more in June.

President Trump took offense over the weekend. He took to social media, writing:

Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain.

Between Walmart and China they should, as is said, ‘EAT THE TARIFFS,’ and not charge valued customers ANYTHING. I’ll be watching, and so will your customers!!!

It appears Walmart will eat the tariffs, at least, to some degree.

Speaking on NBC’s “Meet the Press” Sunday, Treasury Secretary Bessent said Walmart will:

Eat some of the tariffs, just as they did in ’18, ’19 and ’20.

As an investor in Walmart, I don’t like being told to bear the financial burden of someone else’s decision. If Walmart executives (and high-profile investors) eventually share my sentiment, resulting in higher prices, is the average U.S. consumer equipped to handle it?

Yesterday, we looked at the financial health of lower-income Americans

Let’s pick back up with that as we answer the question.

Here’s Jack Kleinhenz, chief economist of the National Retail Federation:

Consumers are still spending despite widespread pessimism fueled by rising tariffs.

While tariffs may have weighed on spending decisions, growth is coming at a moderate pace and consumer spending remains steady, reflecting a resilient economy.

This is good news, and echoes the phenomenon of the “surprisingly resilient” U.S. consumer that’s helped our economy elude a recession for years now.

However, Kleinhenz went on to say that the U.S. economy is “at a pivot point.” So, the more appropriate analysis isn’t “what’s happened so far?” it’s “what’s going to happen?”

But even that question misses the mark. The best question is “what do consumers believe is going to happen, which will influence their spending decisions?”

Back to Kleinhenz:

People are on an economic cusp, and when people worry about their jobs, their anxiety often triggers a slowdown in consumer spending.

Last Friday’s University of Michigan consumer sentiment survey revealed how inflation expectations are running higher than those seen in 2022, back when we had soaring inflation. In early May, one-year inflation expectations jumped to 7.3% – the highest level since 1981.

If you’ve listened to Fed Chair Powell speak, he frequently reports that “long-term inflation expectations remain well-anchored.”

The risk is that these well-anchored expectations are slipping.

Now, what might soothe wary consumers, re-anchoring their expectations, are lower interest rates from the Fed and commentary from Fed presidents that higher prices from tariffs aren’t a major concern.

Neither of these is happening.

The Fed isn’t as dovish as many had hoped

One of the foundations of the bull argument is that we’re on the cusp of a handful of Fed rate cuts. They will lead to a decline in treasury yields that will trigger a daisy chain of fortuitous financial repercussions (think lower mortgage rates and lower borrowing costs at the bank).

Additionally, lower rates will be a tailwind for stock market valuations while also making bond yields look less attractive to investors, further strengthening the case for stocks.

But rates haven’t fallen this year – despite Wall Street’s expectations.

For example, one month ago, traders put 52.1% odds on at least four quarter-point cuts by December.

As I write, that probability has dropped to 6.9%. And if Atlanta Fed President Raphael Bostic has his way, the Fed will cut just once in 2025.

Here’s CNBC:

Atlanta Fed President Raphael Bostic told CNBC on Monday that he currently prefers only one rate cut this year as the central bank tries to balance potential upward pressures on inflation with worries of a recession.

The Federal Reserve released projections in March that pointed toward two quarter-point rate reductions in 2025.

However, Bostic said Monday that the tariffs have been larger than the central bank expected at the start of the year.

Can the average U.S. consumer handle just one cut this year?

It might not be comfortable, but most likely, yes – even if they say otherwise.

Let’s remember that soft data like the consumer sentiment survey doesn’t always translate into reduced consumer purchases.

Powell made this point in his post-FOMC press conference earlier this month:

I think going back a number of years the link between sentiment data and consumer spending has been weak.

So, I’m not suggesting that we’re headed for a deep recession.

But the risk for you and me isn’t so much that the average consumer falls off a cliff, it’s that the stock market has incorrectly priced earnings based on how much the average consumer will actually spend in a tariff environment.

Today, the S&P 500 is barely 3% below its all-time high. For all practical purposes, we’re at the all-time high.

And yet, there’s now a blanket 10% tariff on most of the U.S.’s trading partners, and a 30% tariff on China.

Is that logical?

Bulls may respond, “Yes. The market is looking forward, pricing in the removal of these tariffs.”

Someone forgot to tell Commerce Secretary Howard Lutnick.

About two weeks ago, he said:

We will not go below 10 percent. That is just not a place we’re going to go.

Permanent 10% tariffs and pre-Liberation Day earnings growth rates are incompatible. And yet stocks are basically back to pre-Liberation Day levels.

JPMorgan’s CEO Jamie Dimon sees the disconnect. Here’s CNBC from yesterday:

JPMorgan Chase CEO Jamie Dimon…believes the risks of higher inflation and even stagflation aren’t properly represented by stock market values, which have staged a comeback from lows in April…

In six months, [earnings] projections will fall to 0% earnings growth after starting the year at around 12%, Dimon said. If that were to happen, stocks prices will likely fall.

I hope Dimon is wrong. But let’s at least recognize the risk.

“Recognizing the risk” is why master trader Jeff Clark recently bet against stocks

Last week, we told his readers “It’s time to bet on another decline phase.”

First, if you’re new to the Digest, Jeff is a technical trading expert. He uses a suite of indicators and charting techniques to profitably trade the markets regardless of direction – up, down, or sideways.

Big picture, Jeff believes we’re in a bear market that won’t bottom until later this fall around 4,125. That’s 30% lower than where it trades as I write Tuesday approaching lunch.

Here’s Jeff’s latest thinking from this morning:

The S&P 500 managed to recover all of yesterday morning’s losses, and close up a few points on the day. Much of that action, I suspect, was bears and reluctant bulls throwing in the towel and just buying anything in order to participate in the rally.

Meanwhile, all of the technical warning signs remain.

So, as I’ve argued for the past several sessions – if not the past few weeks – there is a pullback coming. I can’t say definitively when. Though, I suspect it’ll happen soon…

Technical conditions are stretched. Fundamental valuations are stretched. And, the risk in the market right here is far greater than the potential reward.

Troubling as that might sound, even in a bear market, Jeff writes that there’s plenty to look forward to – massive rallies (within a broader decline) that we can trade for fast, double-digit profits, followed by a “generational buying opportunity” at the ultimate bottom.

We’ll continue bringing you more of Jeff’s analysis, but to join him for all his daily updates, click here to learn about joining him.

Even if you’re bearish, don’t overlook the wildly bullish longer-term outlook for leading AI stocks

Even if lower prices are in our short- and medium- term outlooks, higher stock prices for leading AI stocks seem all but certain the farther out we look. After all, we certainly won’t have less AI profits five years from now – likely, dramatically greater profits, with related stock prices to show for it.

Over the last few days, we’ve highlighted Eric Fry’s research on AI – specifically, the “Road to AGI.”

AGI refers to “Artificial General Intelligence,” which is the watershed moment when an AI system can match or exceed the cognitive ability of the smartest human across any task. The arrival of AGI is hurtling toward us, and it’s drawing a sharp dividing line in the investment world. Eric says there are two camps: “the AI appliers and the AI victims.”

We’re running long today, so I’ll bring you more of Eric’s research in tomorrow’s Digest. But Eric’s latest AGI research video is available to you right here.

Eric dives into his AGI blueprint, including details on critical stocks to avoid or sell immediately before they collapse under the weight of AI advancements.

We’ll keep you updated on all these stories here in the Digest.

Have a good evening,

Jeff Remsburg

Moody’s just downgraded U.S. debt, stripping it of its last AAA credit rating – the gold standard, an untouchable badge of fiscal honor. And if you’ve been tuned in to financial media the past few days, you’d think the sky was falling. 

CNBC ran “Breaking News” banners like we were back in 2008. Bloomberg pushed out special alerts. Armchair economists on X were posting at full tilt. 

And yet, the stock market barely blinked… because this downgrade is all bark and no bite: a headline-fueled nothing burger.

After all, this isn’t our nation’s first time at this rodeo.

Let’s rewind to an actual landmark moment…

The 2011 Debt Downgrade That Shook Wall Street

August 2011: That was when Standard & Poor’s – one of the Big Three ratings agencies – shocked the financial world by downgrading U.S. debt from AAA to AA+ for the first time in history. 

Back then, Washington had just dragged the world through a debt ceiling soap opera that saw weeks of political brinkmanship, threats of default, and last-minute deals. The standoff eroded confidence in the government’s ability to manage its finances, and S&P had had enough.

The reaction? Chaos. Stocks cratered. The S&P 500 dropped almost 7% in a day. The volatility index (VIX) spiked to levels not seen since 2008. It’s fair to say that Wall Street was panicking big-time.

But surely all that mayhem was a harbinger of greater fallout to come?

Not quite. In the long term, the debt downgrade meant nothing.

Stocks rebounded. Treasuries actually rallied. 

That’s right: downgrade U.S. debt, and investors rush to buy… more U.S. debt. 

Why? Because when things go south, there’s still no place safer to park cash than Uncle Sam’s bank account – even if S&P says it’s not quite as shiny as it used to be.

Fitch’s 2023 Downgrade: Fire Drill or False Alarm?

Now, fast forward to August 2023. Enter Fitch, stage right – the second of the Big Three. 

Another downgrade, another round of frightening headlines. But by now, the market had learned a valuable lesson:

Ratings downgrades don’t actually change anything.

Stocks dipped slightly, then dusted off the scare and kept marching higher. Bond yields barely moved. The economic machine kept humming. 

Fitch may have pulled the fire alarm, but Wall Street didn’t even look up from its screens.

Moody’s 2025 Move: The Final Chapter in the Downgrade Trilogy

Here we are today. Moody’s, the last holdout, has finally joined the party. It’s like the friend who shows up late to the barbecue with cold hot dogs and asks if folks are ready to eat.

Everyone else already did. The burgers have been eaten. The market has moved on; and so will this news cycle.

This downgrade was inevitable. Moody’s just updated its models, plugged in some fresh deficit projections, tossed in a few political dysfunction coefficients, and out came a new rating. It’s not personal. It’s just math.

But here’s the thing: models don’t run the world. Reality does.

Moody’s drops the government’s credit rating… housing is farther out of reach for lower-income Americans … the K-shaped economy widens … the stock market sector making outsized gains for the wealthy

On Friday, Moody’s Investors Service decided the U.S. government no longer deserves its Aaa credit rating and downgraded it by one degree to Aa1.

Moody’s was the last major credit rating agency to downgrade the U.S. credit rating. S&P was the first back in 2011. Fitch made the change after the debt ceiling battle in 2023.

Here’s Moody’s with its rationale:

We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.

Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat. In turn, persistent, large fiscal deficits will drive the government’s debt and interest burden higher.

The U.S. fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns.

Watch for the impact on the treasuries market

Yesterday, Treasury Secretary Scott Bessent tried to downplay the move, saying:

I think that Moody’s is a lagging indicator. I think that’s what everyone thinks of credit agencies.

But earlier in today’s session, bond yields jumped to reflect the new score. This is because “riskier” debt typically results in higher interest rates that investors require to compensate them for accepting greater risk.

The problem is that higher bond yields usually are bad for Wall Street (pressuring stock valuations in financial models) and Main Street (pressuring budgets via higher borrowing costs).

Earlier today, the 10-year treasury yield jumped to 4.56% (it’s easing slightly as I write), while the 30-day treasury yield climbed to 5.03%, one of its highest readings this year.

But legendary investor Louis Navellier isn’t concerned with the impact on treasuries. Part of the reason why is Bessent himself.

Let’s go to Louis’ Growth Investor Flash Alert this morning:

The main thing you should be aware of is that the treasury auctions are going much better under Scott Bessent than they were under Janet Yellen.

The reason we had almost a permanently inverted yield curve under Yellen is she had a hard time managing some of the long treasury auctions, and some of them didn’t go well.

That’s not happening under Scott Bessent. He knows what he’s doing, he knows how to manage the treasury auctions and that’s that.

We’ll track this and report back.

The split between the “haves” and “have nots” widens

Meanwhile, the National Association of Realtors (NAR) provided another illustration of the growing wealth gap last Thursday.

Here’s CNBC with the quick takeaway:

Higher-income households have near-total access to the housing market. Homebuyers earning $250,000 or more can afford at least 80% of home listings…

For those earning below $75,000 annually, the market has become even less supplied. A homebuyer with a salary of $50,000 could afford just 8.7% of available listings in March.

As you know, we’re still dealing with the fallout of the pandemic-fueled, home price explosion. Prices remain nearly 40% higher than before the pandemic (March 2019).

Lower-income Americans have felt this more acutely, as I’ve written about many times here in the Digest.

But it isn’t just home buyers who feel the pinch

According to Zillow’s 2024 “Rental Market Report,” before the pandemic, average rent growth clocked in at about 4% yearly.

Here’s Zillow with where we are now:

The effects of the pandemic boom remain though, as rents now sit 10% above where they would have been if the 4% growth trend had persisted through the past 5 years.

As renters grappled with these rising costs, the income needed to afford rent increased to $78,592 in December…

The typical U.S. asking rent for single-family homes was $2,174 in December, an increase of 4.4% from last year and 40.6% over the past five years.

Meanwhile, housing/shelter costs aren’t the only source of financial pressure on lower-income Americans.

Student loan collections are adding to the financial strain

Two weeks ago, the U.S. Department of Education restarted collection efforts on defaulted student loans.

According to U.S. Secretary of Education Linda McMahon, millions of borrowers now face the possibility of a hit to their credit score, and possibly automatic wage garnishment.

Here’s CNBC with some of the numbers:

More than 42 million Americans hold student loans, and collectively, outstanding federal education debt exceeds $1.6 trillion.

More than 5 million borrowers are currently in default, and that total could swell to roughly 10 million borrowers within a few months, according to the Trump administration.

Such financial pressure is a contributor to last Friday’s dismal University of Michigan consumer sentiment survey.

The index fell to 50.8, down from 52.2 in April. This reading is the second-lowest level on record – trailing only June 2022.

But haven’t the data shown how resilient and strong the U.S. consumer has been – and still is?

In general, yes. But two things can be true at once…

The economic data may appear reasonably strong – and yet, simultaneously, lower-income Americans can be losing ground financially.

This apparent contradiction resolves when we dig into the data, beyond headline numbers.

What’s happening is the spending by the “haves” is more than offsetting the flat spending (and until recently, down spending) by the “have nots,” providing a rosy-yet-incomplete view of the economy.

Let’s jump to the Fed’s report, “A Better Way of Understanding the US Consumer: Decomposing Retail Spending by Household Income” from last fall:

For the past several months, retail sales estimates published by the Census Bureau have indicated that consumer demand for retail goods remains resilient.

However, published measures do not provide details on which consumers’ spending has remained resilient…

Consumer resilience has been driven by middle- and high-income households, while low-income households have pulled back since mid-2021 through mid-2023 and only recently recovered to their mid-2021 levels of real average retail spending.

Higher-income Americans are spending more because of the “wealth effect”

To make sure we’re all on the same page, the wealth effect is the dynamic wherein spending behavior changes in response to how individuals perceive their wealth, usually due to fluctuations in asset values.

Basically, the richer we feel on paper, the more we spend.

Zeroing in on stocks, according to Fed data, the top 10% of Americans hold about 93% of all stock wealth. So, with stocks now back to within throwing distance of all-time highs, the wealth effect for these households is raging.

Let’s go to Fox Business:

America’s wealthiest households are accounting for a growing share of consumer spending as market-driven gains in their net worth fuel a wealth effect, a new analysis by Moody’s Analytics finds.

The report authored by Moody’s Analytics chief economist Mark Zandi found that the top 10% of U.S. households in terms of earnings, defined as making about $250,000 or higher, account for 49.7% of consumer spending – a record since at least 1989, according to the analysis…

These findings come as less affluent households continue to struggle with the effects of persistent inflation, as well as high interest rates that have hit the housing market.

This is our K-shaped economy in action.

Digging in even further, how are these “haves” generating so much wealth in the stock market?

I suspect you already know the answer…

Tech/AI.

For context, below, you can see how AIQ – the Global X Artificial Intelligence & Technology ETF – is outpacing the S&P by about 50% over the last two years.

But AIQ is a broad ETF containing 86 large- and mega-cap stocks. So, its overall returns are weighed down by some of the laggards.

To illustrate how exceptional specific AI winners have performed, below are the two-year returns for a handful of leaders from a variety of sectors.

These companies either make AI possible for other companies or are effectively leveraging AI in their own operations:

• SoundHound AI (SOUN)… +261%
• Sezzle (SEZL)… +595%
• Palantir (PLTR)… +979%
• GeneDx Holdings (WGS)… +1,030%
• Applovin (APP)… +1,360%

(Disclosure: I own APP.)

For perspective, consider some of the two-year returns for the following well-known stocks that have struggled for a variety of reasons:

• Lululemon (LULU)… -14%
• Starbucks (SBUX)… -17%
• Hershey Foods (HSY)… -37%
• Nike (NKE)… -46%
• Dollar Tree (DLTR)… -46%
• Este Lauder (EL)… -66%

Not only do we have K-shaped economy, we have a K-shaped stock market.

Our macro expert Eric Fry has been tracking this divergence…as well as one of the greatest contributors to it

From Eric:

Artificial intelligence is slashing the world of commerce into two distinct groups: the AI appliers and the AI victims.

The companies that hope to survive and thrive must adopt and integrate AI technologies as quickly as possible.

Those that fail to do so will perish… and time is of the essence, especially as we get closer and closer to achieving artificial general intelligence (AGI)…

Every company on the planet now faces the Darwinian prospect to adapt or perish.

Now, there are many ways to invest in AGI. The most obvious is to buy shares of companies that are providing key parts of the infrastructure that will accelerate AI technology toward AGI. Think Nvidia.

While Eric believes there’s plenty of money still to be made in this type of stock, he suggests investors widen their perspectives…

Look for companies that have been beaten down and forgotten about – but are now quietly finding ways to leverage AI to reduce costs, increase revenues, and gain market momentum.

Eric calls these hidden gems “Stealth AGI” companies:

[These Stealth AGI picks] industries include shipping and logistics… beauty, fashion, and wellness… and food and beverage.

These are companies that might even be considered a little boring, especially compared to headline-grabbers like Nvidia.

However, these less-exciting names will adopt AI and AGI in a bid to become more profitable, often by orders of magnitude.

Eric has put his favorite stealth AGI pick in one of his three new special reports. He discusses it more in his new special broadcast, The Road to AGI: The Final Warning.

Here’s he is with additional details about this free broadcast:

I reveal more about my AGI blueprint, including details on critical stocks to avoid or sell immediately before they collapse.

Plus, I’ll show you one of my top-rated AGI-related stock picks – name and ticker symbol. It recently registered a 46% gain while the S&P 500 dropped 5%…

The stakes have never been higher because the pace of change is more rapid than anyone could have imagined. The companies that adapt quickly will be the new kings of the market.

Those that refuse to adapt, or simply are slow to change, will go the way of the dodo bird.

Circling back to the top of this Digest…

A striking parallel is emerging…

Just as lower-income Americans are being squeezed by rising rents and stagnant wages, companies slow to adopt AI are falling behind.

Meanwhile, higher-income Americans – buoyed by asset appreciation and the wealth effect – continue to spend, and AI-driven firms are capturing outsized growth, investor attention, and market returns.

So, we have two widening gaps here. And they both point toward the same takeaway…

Financial and technological advantages are compounding at the very top.

The causes are complex and varied. But both trends reflect a system rewarding those positioned to leverage innovation, whether in income or AI/tech infrastructure. Those who can’t are increasingly left behind.

This is a divergence that’s critical to monitor from both a societal stability and personal wealth perspective. All signs point toward its acceleration.

Here’s the link again for Eric’s research video on how he’s preparing.

Have a good evening,

Jeff Remsburg

During these busy times, it pays to stay on top of the latest profit opportunities. And today’s blog post should be a great place to start. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Stock Grader recommendations for 117 big blue chips. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and act accordingly.

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Article printed from InvestorPlace Media, https://investorplace.com/market360/2025/05/20250519-blue-chip-upgrades-downgrades/.

©2025 InvestorPlace Media, LLC

Hello, Reader.

Standing at 2,717 feet (or 828 meters) tall, the Burj Khalifa skyscraper gives the United Arab Emirates (UAE) some bragging rights: It’s the tallest building in the world.

The towering structure is in Dubai, the most populated city in the UAE. Burj Khalifa was completed in 2010, and it attracts about 17 million tourists per year, according to the United Kingdom’s Institute of Civil Engineers.

But now the UAE might reach another world record.

And this time, it’s all about artificial intelligence.

On Friday, Bloomberg announced that OpenAI will help develop a massive new data center in the UAE. Tech giants Oracle Corp. (ORCL) and Nvidia Corp. (NVDA) will also support the project.

This new data center will cover 10 square miles and use as much power as around five nuclear reactors, making it potentially one of the largest data centers in the world.

The UAE site is a sister campus to OpenAI’s Texas-based Stargate Project, which was announced on the first day of President Donald Trump’s second term. That $500 billion initiative, led by OpenAI, Oracle Corp. (ORCL), and Japan’s SoftBank Group Corp. (SFTBY), was created to support AI development in the U.S.

But now, the developer of ChatGPT is offering the Middle East the infrastructure needed for AI services. Additionally, the UAE Stargate will also eventually allow for more AI collaboration between the U.S. and UAE.

Of course, this initiative isn’t just altruistic. It’s another step forward for OpenAI to achieve its company mission “to ensure that artificial general intelligence – AI systems that are generally smarter than humans – benefits all of humanity.”

To my sense, artificial general intelligence (AGI) went mainstream when OpenAI first partnered with Project Stargate. The company wrote in a January blog post announcing the initiative…

All of us look forward to continuing to build and develop AI – and in particular AGI – for the benefit of all of humanity. We believe that this new step is critical on the path and will enable creative people to figure out how to use AI to elevate humanity.

But what many folks don’t know is that the company had already started making strides in its mission…

On September 12, 2024, for example, the company quietly released its new o1 model. This system isn’t an AI successor model to ChatGPT or a precursor to GPT-5, the company’s next expected large language model (LLM).

Rather, it is a series of AI models designed to reason instead of recognize patterns. The models are specifically engineered for complex reasoning tasks, particularly in fields like science, math, and coding. They work through problems step by step, similar to human reasoning.

It’s like we’ve added a left brain to an already existing GPT right brain. And this complete system could be our first glimpse into AGI, which is a type of AI that possesses human-level intelligence.

Then last month, OpenAI released o3 and o4-mini, the latest in its o-series of models trained to think for longer before responding. OpenAI says that these are the smartest models it has released to date.

So, with the release of these new systems, OpenAI flipped a switch that could rapidly accelerate the timeline for AGI.

And with each new AI milestone, we’re getting ever closer.

Investors who are unprepared will miss the transformative opportunities that AGI will bring. But those who position themselves correctly could witness the greatest moneymaking opportunity in human history – with the possibility to surpass even the Internet Revolution.

That is why I just issued my “Final Warning.”

I started talking about AGI last August – right before OpenAI released its first o-series model. At the time, I warned that we were closer to AGI than most people think.

Back then, hardly anyone had heard of AGI. But now, the arrival of the technology is inevitable – and the mainstream media is starting to report about it.

That is why I put everything you need to know in my new The Road to AGI: Final Warning broadcast.

During this free broadcast, I also reveal one of my top-rated AGI-related stock picks – name and ticker symbol. It recently registered a 46% gain while the S&P 500 dropped 5%.

To learn even more about artificial general intelligence, be sure to check out what we covered here at Smart Money this past week…

Smart Money Roundup

Wednesday, May 14, 2025

Why This Precious Metal Is Your Best “Bet on Disorder” Right Now

As the astute financial writer James Grant observed recently, “Gold is a bet on monetary disorder – indeed, on other kinds of disorder, too, including fiscal, geopolitical and presidential.” This bet has been paying off nicely for the last several months; even still, I suspect the final payoff has not yet arrived. In this issue, I share a trading strategy that I use to maximize gains in the gold market… and how you can use it, too.

Thursday, May 15, 2025

Why Understanding AGI Now Could Be Your Most Profitable Decision

Soon enough, artificial narrow intelligence (ANI) will start looking a lot more like what experts in the field call “strong” AI – or artificial general intelligence (AGI). That’s why it’s so important to understand what exactly what AGI is… and where we are on the Road to AGI. Then, I’ll show you how you can turn its imminent arrival to your advantage.

Saturday, May 17, 2025

Buy Stocks in These 3 Categories – or Get Left Behind

A company’s relationship with AGI is the lens through which investors now must view all stocks. And the companies that hope to survive and thrive must adopt and integrate AI technologies as quickly as possible. Those that fail to do so will perish… and time is of the essence. That is why I’ve developed a three-step process for finding companies that will survive and thrive on The Road to AGI.

Sunday, May 18, 2025

What Henry Ford’s Farm Tractor and AI Have in Common

Henry Ford’s “Fordson Model F” tractor went into production in 1917 and became an instant hit with farmers in the Midwest. Artificial intelligence is not unlike Ford’s novel tractor. Changes of that magnitude are difficult to imagine and, therefore, difficult to embrace seamlessly and profitably. That is why we must “future-proof” our lives to the furthest extent possible… and why we must remain focused on the once-in-a-generation investment opportunities AI is producing.

Yet Another AGI Jolt Is Headed Our Way

Later this week, my colleague the legendary investor Louis Navellier plans to reveal new research that shows how President Donald Trump’s latest economic plans could unleash up to $10 trillion in new stimulus, create millions of high-paying jobs, and spark the next phase of a generational bull market.

In a brand-new presentation, Louis will lay out the three-pronged strategy the president is already rolling out. One of those prongs is what Louis calls “Tech Liberation,” and it could jolt AGI development… and the entire tech corner of the U.S. economy.

Louis tells me his system is flashing fresh signals on a new class of stocks poised to benefit from this three-pronged strategy. Watch this space for more on his new research later this week.

Regards,

Eric Fry

Last week ended on a positive note in the wake of easing tariff tensions and cooler-than-expected inflation reports.

As you probably know, the U.S. and China are hitting the “pause” button on tariffs while they work on making a deal, and the markets celebrated.

Meanwhile, we continue to get a growing body of evidence that the Federal Reserve is fighting a mythical inflation “boogeyman”. For example, economists were expecting both the headline and core Consumer Price Index (CPI) to rise 0.3% in April.

Both only rose 0.2%.

Meanwhile, the Producer Price Index (PPI) declined 0.5% in April, compared with expectations for a 0.3% rise.

This is good news, folks, but it being overshadowed by the fact that the U.S.’s credit rating was downgraded by Moody’s to Aa1 from the previous top rating of AAA. As a result, Treasury yields went higher. The 10-year yield is sitting at about 4.48%, up from 4.16% at the end of April.

Now, I’m not worried, as I’m fully confident that Treasury Secretary Scott Bessent will handle our Treasury auctions better than his predecessor, Janet Yellen.

Meanwhile, in this week’s Market Buzz, I’m joined by special guest Paul Hickey, co-founder of Bespoke Investment Group. I use Bespoke’s research all the time, so I’m very excited to have him join us. We’ll be talking about what a “triple play” means, seasonality trends, the historic nature of market rallies and much more. I think you’ll find this episode worthwhile, so don’t miss it!

Click the image below to watch now.

If you’re not subscribed to my YouTube channel, you can do that here. Also, if you want to learn more about Paul and Bespoke’s research, click here.

A Historical Transformation

Now, I don’t want things like tariffs or a credit rating downgrade to distract you.

Because the reality is something much bigger is at work in the market – and you need to be prepared.

The fact is, we’re witnessing the early stages of a historic market transformation.

It’s a market where some stocks will rocket 1,000% or more in a few months – while others are relegated to the dustbin of history.

It’s a transformation that will concentrate unprecedented economic wealth and power in fewer hands while systematically eliminating the very foundation of middle-class prosperity.

I know because I’m one of the beneficiaries of this change. I’ve seen it play out, and I’m deeply concerned.

That’s why I filmed a special video briefing.

Because this crisis could also be the greatest financial opportunity of our lifetime – if you play it right.

Go here to watch my presentation now.

Sincerely,

Louis Navellier

Editor, Market 360

Editor’s note: “Musk’s Boldest Vision Yet: How Optimus Could Be the iPhone of Robotics” was previously published in April 2025. It has since been updated to include the most relevant information available.

If you thought the Tesla (TSLA) Cybertruck was bold, just wait… Because Elon Musk’s most world-changing product likely isn’t a car, rocket, social media platform, or AI chatbot.

Instead, we believe that his walking, talking humanoid robot Optimus will prove his true magnum opus.

In fact, according to Musk himself, it could become the most valuable product in history, potentially surpassing even the iPhone. 

Tesla’s humanoid robot is powered by the same AI brain and Full Self-Driving (FSD) tech that runs its autonomous vehicles. But unlike a car, Optimus can walk, talk, lift, carry, assemble, cook, clean, and, perhaps most importantly, learn.

Not to mention, it’s already operational, working inside Tesla factories, performing light-duty tasks and learning in the real world. And it won’t remain insular for long. Musk has said Tesla will manufacture thousands of these bots this year, with plans to sell them to external businesses in 2025 and to consumers shortly thereafter.

The Tesla CEO is thinking big. On a Wall Street conference call not long ago, he said:

“Optimus will be the overwhelming majority of Tesla’s value… It has the potential to generate over $10 trillion in revenue.”

This is the same man who created the world’s most valuable car company, most successful private space firm (SpaceX), and one of the most disruptive energy businesses with Tesla Energy. And even considering those prolific triumphs, he believes that Optimus is his crown jewel.

Why is Musk so obsessed with this technology?

Because he sees what’s coming…

Why This Bot Could Outshine the iPhone

We feel that the stars are aligning in a way that could catapult humanoid robots into the center of American industry, policy, and everyday life faster than anyone expects.

AI is evolving fast. For example, back in September 2024, most AI models averaged between 80 and 93 IQ, as measured by TrackingAI. Today, most fall between 95 and 130. And that’s just within about six months’ time! 

Pair that level of intelligence with a humanlike machine body, and you have the blueprint for an unlimited, 24/7 labor force. No sleep, wages, lunch breaks, or benefits – just productivity.

That’s a future Musk is actively building. And it’s why we think Optimus could be the most disruptive product ever launched.

This is a machine that could perform warehouse work, manage inventories, assist in factories, restaurants, and homes, patrol and secure properties, perform elder care and domestic duties…

In short, it could easily replace and supplement human labor throughout the entire global economy.

And given Tesla’s scale, vertical integration, and AI expertise, there’s seemingly no company better positioned to manufacture humanoid robots at cost.

But things get even more interesting…

Hello, Reader.

I once asked my dad why his father migrated from the Illinois farm country to Montana cattle country in the early 1900s.

“Henry Ford destroyed all the farm jobs,” he told me. “My dad couldn’t get work on the farms anymore, so he moved up to Boseman to work as a cowboy.”

Now, Henry Ford did not destroy farm jobs personally, of course… but his innovative tractor did. His “Fordson Model F” tractor went into production in 1917 and became an instant hit with farmers in the Midwest.

As the first mass-produced, inexpensive tractor, the Fordsons captured an overwhelming 70% share of the market by 1922, and their popularity grew rapidly. By 1928, 700,000 of them were rolling off the production line each year.

Artificial intelligence is not unlike Henry Ford’s novel tractor.

It is a new technology that will produce widespread efficiency gains, while also reducing or eliminating entire categories of employment.

Changes of that magnitude are difficult to imagine and, therefore, difficult to embrace seamlessly and profitably. That is why we must “future-proof” our lives to the furthest extent possible.

It is also why we must remain focused on the once-in-a-generation investment opportunities AI is producing.

In effect, artificial intelligence is slashing the world of commerce into two distinct groups: the AI appliers and the AI victims.

The companies that hope to survive and thrive must adopt and integrate AI technologies as quickly as possible. Those that fail to do so will perish… and time is of the essence, especially as we get closer and closer to achieving artificial general intelligence (AGI).

I first sounded the alarm about the approach of AGI last August. At that time, I shared several companies that I believed to be both AI winners and losers to my subscribers at my elite trading service, The Speculator.

And it turns out, my calls were right on the money, literally.

So today, let’s take a deep dive on one AI success story to examine the traits that powered its market-beating results… and one a company in the crosshairs of AI that everyone should avoid.

Let’s take a look…

A Toast to This AI Winner

Since I profiled this AI winner last August, its stock has soared 80%.

This Boston-based firm provides AI-enabled solutions for virtually every facet of the restaurant biz – from online ordering fulfillment to reservations management to supply-chain control.

I’m talking about Toast Inc. (TOST).

Since 2011, Toast has been perfecting a platform that can come in and handle all of the tech that restaurants need, integrating online ordering, contactless payments, delivery services… and even bookkeeping.

The result is a software platform that almost all of us – or at least nearly everyone who orders takeout or delivery online (myself included) – have used at some point.

This technology has helped Toast achieve a remarkable 119% net revenue retention rate since 2015. This software-as-a-service (SaaS) metric calculates the percentage of revenue retained from an existing customer over a specific period of time.

In essence, Toast has become a database software company. The firm has one of the largest and most valuable datasets in the entire restaurant industry, enabling it to develop and perfect leading-edge AI tools for the industry.

Toast’s database software can help restaurants calculate their costs in real-time and understand when to offer specific food items and at what price. These real-time insights can mean the difference between success or failure in the cutthroat restaurant business.

The more data Toast gathers from its growing roster of clients, the better its AI becomes.

Toast’s operating margins have achieved a pivotal inflexion point, from negative to positive. After running double-digit negative margins for several years, that metric inched into positive territory nine months ago and has continued moving higher. As a result, Toast’s gross profit (EBITDA) is also positive and moving higher.

Last week, the company reported record revenue and EBITDA for the first quarter, both of which topped analyst estimates by a wide margin. The stock celebrated the good news by jumping 10% on the day of the earnings release.

Toast is integrating AI technology into its market-leading platform as rapidly and comprehensively as possible, which is one big reason why I expect the company to thrive.

It’s the kind of company you may want to investigate further, as it should produce growing revenues and earnings over the coming years.

As AI technologies stretch the tentacles into every facet of our existence, the roster of successful “AI appliers” will grow by the day. But the roster of “AI victims” will grow even larger.

Here is one such stock to avoid…

There Can’t Be Winners Without Losers

The companies that fail to adopt AI technologies either lack the expertise to do so or have business models that are fundamentally incompatible with AI.

Either way, we do not want to be holding stocks that AI is threatening.

That’s why I continue to highlight at-risk companies from time to time, like I did last August when I identified Shutterstock Inc. (SSTK) as a company “sitting in the crosshairs of AI.”

As I explained at the time…

Once upon a time, Shutterstock was a cutting-edge graphics company with a massive, and valuable, library of proprietary images. Today, that library looks more like an anvil than a pair of wings.

Thanks to GenAI technologies like OpenArt, “proprietary graphics” are nearly a thing of the past…

Because of these competitive threats, subscriber “churn” is increasing at Shutterstock. As a result, gross margins and net income are both collapsing… These declining fortunes reflect declining demand for the company’s core content library.

Since issuing that warning, Shutterstock’s financial results have continued to deteriorate. The company posted EPS of just $1.01 last year, not the $1.90 analysts expected, while the consensus earnings estimate for this year has tumbled from $3 to $2.10. Not surprisingly, the stock is down more than 40% since my skeptical analysis.

Shutterstock is not an outlier. Therefore, we must examine every prospective investment through the lens of AI and be alert to both the opportunities and the hazards it will create.

That’s why I’ve just put the finishing touches on four new research reports focused on investing in AI before artificial general intelligence takes hold. Three of the reports highlight a stock to buy, while the fourth one warns about three stocks to sell.

You can learn how to access those reports by clicking here.

Like last August, I am once again hosting an event on AGI’s dangers – and opportunities.

The time to get ready before AGI appears is running out, which is why I am now issuing my “Final Warning.”

During that event, which you can watch right now here, I put forward a three-part blueprint, featuring…

• My thoughts on why precious metals, energy, real estate, and biotech sectors are where everyone should be looking right now…
• My No. 1 AGI-related stock pick that’s already showed a 46% gain while the S&P 500 index dropped 5%…
• And details on critical stocks to avoid or sell immediately before they collapse.

Click here to watch my urgent “Final Warning” presentation.

Regards,

Eric Fry