A Comment -- General Comments From an Expert (A Commentary)

Markets today didn't react much to the current debt-ceiling crisis. Performing best were Cathie Wood-type stocks that have little money, no profit and promise future growth. Those hurt were stocks that have been performing well, like McDonald's and Pepsi. Sectors that could be hurt by a debt  default: real estate, financials, utilities, machinery and companies that need credit (cars, aircraft parts, for example). Those not hurt would be megacap tech. Then again, some investors ask, Who cares? It's all theater. When the nation's debt was downgrounded in 2011, it was a colossal buying opportunity. No, the US won't run out of money, but a default would harm its reputation abroad.

A.I. Investment Opportunities: Auto-GPT – Autonomous Workers. Auto-GPT is the equivalent of a fully autonomous, 24/7 full-time employee that can browse the internet and learn how to complete tasks by itself. Auto-GPT uses ChatGPT’s model, and allows individuals to create autonomous workers with pre-set goals and tasks. The interesting part is that the autonomous worker chooses and learns how to complete these tasks by itself.

Creating an autonomous worker via Auto-GPT works like this:

Step 1: Define a name for the bot

Step 2: Define the broad purpose of the bot (ie. Find the best set of golf clubs for a specific price, create a business model and plan and write down the steps needed to carry out this plan)

Step 3: Set clear, defined goals for what the bot is to accomplish

The bot will then begin working on small tasks to complete its larger goal, and it will even create ‘sub-workers’ below it to go out on to the internet and learn how to perform specific tasks. Models like these can even be used to refine and create better Large Language Models (LLMs) to further accelerate the speed at which advancements take place.
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Believes inverted yield curve (higher short term, than long term rates) indicating that investors optimistic about markets. 
Projected recession not hitting economy as hard as previously thought.
US debt ceiling, OPEC cuts & inflation numbers worrying investors.
Fastest pace of US Federal Reserve interest rate hikes in history the past 1.5 years. 

A.I. Investment Possibilities: AI Generative Images. The same company that created ChatGPT also released an AI program called DALL-E that can generate images from text. DALL-E is based on the same GPT architecture as ChatGPT, and it is capable of generating highly realistic images that correspond to the text input that it receives. The implications of AI-generated images are numerous, ranging from art and design to e-commerce and advertising.
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S&P 500 is up over 8% this year, but it's a weighted average of roughly 500 companies. A better representation is the median return of those companies, which is 0%. 

Different story in Canada. TSX is posting a pretty healthy YTD return of about 5%, but it's more broadly based, as the median stock within that composite index is also up about 5%.

He's about 60% invested in Canada and 40% in the US. Seeing opportunities on both sides of the border, but more so in Canada.

Debt ceiling issue will be resolved. He agrees.

Also, multiple rate cuts by the US Fed later this year, and a soft landing for big US corporations. These two are incongruous with each other. Hard to believe with inflation still above target, that interest rates will be aggressively cut this year, unless there's a significant downgrade in the macro backdrop. And if so, it's difficult to maintain that this goes on while corporations are growing their profits, which is what the consensus is baking in right now. Complacency in the market.

The great debate is whether the US Fed is on pause. Inflation numbers are coming down, but still way above the Fed's range of 2%. In light of what's going on in the banking industry, the Fed indicated it was willing to pause (but not cut) given that financial conditions have tightened. But the market consensus is that the Fed will start cutting in the back half of the year.

Interest rate cuts are accommodative, good for economic growth. But the employment market remains quite strong. Consumer spending is slowing, but remains quite resilient. Usually the Fed starts to cut when it sees economic deterioration, and she doesn't know if we're at that point yet. That's the big question mark.

General feeling that rates are stabilizing right now. Housing market has been in a recession the past year. The market's readjusted to higher rates. Sellers are coming back into the market and things are starting to improve.

Leading indicators have contracted for the last 6 months, and when those turn negative it means the economy is contracting, and usually that means a recession. But it can take many months. All the money that consumers got during Covid changes things this cycle, as they can draw on savings to offset inflation this time around. Before, consumer households would really be hurt with inflation spiking up to 8-9%.

Certain parts of the market have been in a recession, such as real estate and manufacturing. We've been in a rolling recession. Office real estate sector is not doing well, especially in the US.

CDR is hedged, and you can buy fractions of shares. Geared for a smaller investment portfolio. The bid/ask spread might be wider, and the stock might not be as liquid. Her preference is to buy equities directly on the NASDAQ.

What is ChatGPT? ChatGPT is an AI chatbot that uses machine learning algorithms to respond in a human-like fashion. It is known as a ‘Large Language Model’ (LLM) which was trained on a large majority of the data on the internet, and the training was ‘unsupervised’, which means that it allowed the model to learn patterns and relationships in the data on its own. Using ChatGPT’s interface, one can have a conversation about virtually any topic, and the results have so far enabled people to learn and work at a faster pace than before. For example, the first paragraph of this blog post was written entirely by ChatGPT. Even though ChatGPT is fairly new, there are already AI-generated financial analysis, tools & newsletters that are strictly written by AI. Individuals are using ChatGPT for personal learning, advancements, curiosities, and the amount of new content as a result of this will be enormous.
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Believes active management of stocks is better strategy than passive investing.
Low P/E ratio a good indicator of stocks that will perform well in the future.
Investors should position themselves in under-valued areas in order to get performance in portfolio.
Expecting investors to return to energy as financial returns are proven.

Believes Walmart best proxy for average consumer & economy.
Large retails (Walmart) will most likely start to pass on inflation to consumers.
Higher prices will impact average consumers and put pressure on economy. 
Is expecting inflation to be sticky (not going away).
Bottom 1/3rd of economy (living paycheck to paycheck) will be impacted by inflation the most.
 

Believes US Treasury will run out of money soon (will have to raise debt ceiling).
Risk of US government defaulting is zero (is reserve currency for global economy). 
Does not think US should have a debt ceiling.
Noise factor very strong - US debt ceiling not relevant to average investor.