Phase One

 Today’s resources are starting to shrink as AI comes to rescue us from chaos. Or so goes the narrative, depending on your source. I bring this up because in my opinion, the 2006 introduction from Google (GOOGL) of the algorithm aimed at aggregating the news to accommodate, peoples wants over their needs, has carved out division as the outcome. And given its suitability towards monetization and political manipulation, has it also become the new norm? In my opinion, if we let it. I consider this worthy of note as AI becomes the new debate, or rather division of opinion. Some see it as the end of humanity as we know it, sounds a lot like climate change arguments. Anyway, my focus is less about what AI will disrupt, and more on what It will change. That’s because it’s change the correlates with that outcome.

 Where change is happening and where the introduction of AI is, in my opinion, is more useful. For example, I’ve written about the current use of a technology used in Industrial and manufacturing called Digital Twin. Digital Twin technology places sensors on everything from oil rigs to wind turbines and collects data that can then be used to virtually duplicate the machines and analyze both current and projected outcome using AI and machine learning devices. Companies investing in this important technology are our usual FANG buddies, old and new such as Cisco Systems (CSCO) and Microsoft (MSFT). Another area that I’ve been observing lately is still in early stages although, I’m not sure why. I’m referring to Vertical Farming. Vertical Farming introduces a method of farming using both ground and hydroponic methods that are placed within a contained environment and rather than scaled out, it is scaled up. The overall outcome is the ability to farm in rural, urban, any climate or geography, including underutilized land and vacant buildings. There are companies that are investing in this technology, such as agricultural supply chain manager and processor Archer-Daniels-Midland Co. (ADM) and multi-channel retailer Walmart Inc.  (WMT).

 Distraction is the aim of our news sources. Anything mentioned above is rarely discussed with enthusiasm. But the same can be said about other aspects of the current economic environment, such as the slowdowns in retail spending suggested by recent data coming in below consensus estimates. Other signs of slowdown are shown in recent growth of Industrial Production and Housing Starts. And Existing Homes Sales showed continued weakness, all housing was followed by outside spending as well. This week Home Depot (HB) and Restoration Hardware (RH) released weaker than expected results and provided guidance that the rest of the year may be no better. My takeaway was more focused on the pullback in spending that is clearly impacting the higher cost durable products and DIY expenditures. The former also being seen in the sharp declines in automobile purchases, new and used. In, my opinion, this could be phase one in the ultimate slowdown in overall economic activity as measured by GDP. Unfortunately, in my opinion, job gains that the Fed is focused on curtailing, are more likely to stall. This would be good for keeping inflation in check, but still open to it being enough for the Fed to still raise rates in June.

 It important to recognize that singular strategies have not fallen victim to divisive Algochums volatility, it’s just on hold until uncertainties can show resolve and the economy can return to something like a norm, although I don’t expect the political environment to follow anytime soon. In the meantime, focusing on the future to achieve growth and the present to maintain defense, I look forward when the time comes when I can begin to dismantle the latter.