by Brian Shilhavy, Health Impact News:
While I was among a very small minority in the 4th quarter of 2022 warning the public about the Big Tech crash that was coming and was a threat to bringing down the entire U.S. economy, judging from my newsfeed the past 2 weeks, I no longer think that this view is the minority view anymore.
Both the alternative and corporate media are increasingly printing news and opinion pieces about how dangerous it is right now to have just a handful of Big Tech companies holding up the entire stock market, and mostly because of the hype over AI.
TRUTH LIVES on at https://sgtreport.tv/
I am going to highlight much of this news in this article, along with evidence that the banking crisis is actually getting worse, and then go further than most will dare to go, and consider the question: Is this all intentional??
Without the influence of AI as an investment theme, the S&P 500 would be DOWN this year.
Graham Summers of Phoenix Capital Research is seeing what many other investors are observing, and this is what is making a LOT of people on Wall Street nervous these days.
Artificial Intelligence (A)I is the current major theme for the markets. With economically related companies (TGT, X, etc) showing lower returns, investors are piling into AI as the next major source of growth for corporate top lines (revenues) and profit margins (presumably AI will replace many employees which will lower operating costs).
As far as market price action is concerned, anything associated with AI is in a strong uptrend. The most notable example is Nvidia (NVDA) which has more than doubled year to date. Even the multi-trillion dollar market cap giant Microsoft (MSFT) has caught a bid due to its exposure to AI. MSFT is up 30% year to date.
AI is THE market mover for 2023. Societe General has noted that AI-associated stocks account for ALL of the gains in the broader stock market this year.
Put another way, without the influence of AI as an investment theme, the S&P 500 would be DOWN this year.
Indeed, things are becoming so frothy as far as AI is concerned that executives are mentioning AI as frequently as possible during earnings calls… even if their company has little if any exposure to the new technology!
What does this all mean? (Full article.)
Financial analyst Charles Hugh Smith, never one to pull punches or follow the corporate propaganda, chimed in this week as well.
What If AI Is Only a Cost and Not a Profit Bonanza?
No one knows how the flood of AI products will play out, but we do know it’s unleashed a corporate frenzy to “get our own AI up and running.” Corporate fads are one of the least discussed but most obvious dynamics in the economy. Corporations follow fads as avidly as any other heedless consumer, rushing headlong into whatever everyone else is doing.
So let’s talk about costs of AI rather than just the benefits. Like many other heavily-hyped technologies, Large Language Model (LLM) AI is presented as stand-alone and “free.” But it’s actually not stand-alone or free: it requires an army of humans toiling away to make it functional: “We Are Grunt Workers”: The Lowly Humans Helping Run ChatGPT Make Just $15 Per Hour (Zero Hedge).
“We are grunt workers, but there would be no AI language systems without it. You can design all the neural networks you want, you can get all the researchers involved you want, but without labelers, you have no ChatGPT. You have nothing.”
The tasks performed by this hidden army of human workers is euphemistically sanitized by corporate-speak as data enrichment work.
Then there’s the stupendous costs of all the extra computing power needed to deliver AI to the masses: For tech giants, AI like Bing and Bard poses billion-dollar search problem
What makes this form of AI pricier than conventional search is the computing power involved. Such AI depends on billions of dollars of chips, a cost that has to be spread out over their useful life of several years, analysts said. Electricity likewise adds costs and pressure to companies with carbon-footprint goals.
LLM-AI is riddled with errors, and nobody can tell what’s semi-accurate, what’s misleading and what’s flat-out wrong. Despite wildly optimistic claims, locating the errors and semi-accuracies can’t be fully automated. Errors are inconsequential in an AI-generated book report, but when patients’ health is on the line, they become very consequential: I’m an ER doctor: Here’s what I found when I asked ChatGPT to diagnose my patients.
This raises fundamental questions about precisely how much work LLM-AI can perform without human oversight, and the all-too breezy claims that tens of millions of jobs will be lost as this iteration of AI automates vast swaths of human labor.
AI excels at echo-chamber reinforcement of risky or error-prone suppositions and policies: Spirals of Delusion: How AI Distorts Decision-Making and Makes Dictators More Dangerous. What’s the threshold for concern that the AI conclusions are riskier than presented? How do we calculate the possibilities that the AI conclusions are catastrophically misguided?
At what point will decision-makers realize that trusting AI is not worth the risk? If history is any guide, that realization will only arise from financial losses and bad decisions. (Full article.)
The corporate financial news, while not as dire as the alternative media, is also getting nervous.
The Nasdaq is on the verge of exhaustion, says famed technical strategist Tom DeMark
Stocks have climbed a mountain of worries this year, ranging from lingering inflation to bank collapses to the possibility that the U.S. Congress might just decide not to pay its bills. But has the run, also fueled by excitement over artificial intelligence, gone too far? (Full article.)
The ‘end of the runway’ is nearing for lofty tech and soggy banks. Get ready, says this strategist
A new week is pointing to a perky start for Wall Street, with stock futures in the green. But one might wonder “What gives?” as old worries — banking sector concerns and a debt-ceiling standoff — lurk, and some market observers assure the S&P 500 SPX, is going nowhere until those are resolved.
But that index may be nearing the breaking point sooner than any Washington solution can get there, judging by the technical setup, says our call of the day from BTIG’s chief market technician, Jonathan Krinsky.
“We think we are reaching the end of the runway, where either banks need to begin to rally, or tech needs to fall. We continue to think it’s the latter and saw the start of that move on Friday,” Krinsky told clients in a note. (Full article.)
Banking Crisis Worsens
As you can see from the corporate news coverage, they continue to worry about more banks failing, and how are all these Tech companies going to fund their AI products if their banks continue to fail?
More on the banking crisis:
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