Inflation hits lowest level since early 2022 and crypto exchange FTX faces collapse – Forbes AI Newsletter November 12

TL; DR

• Crypto exchange FTX looks set to collapse after rival and top investor Binance pulls out of a last-minute bailout acquisition
• Inflation hit its lowest level since January this year, with the latest annual figure falling to 7.7%.
• The stock market reacted strongly with its biggest gains since 2020
• Top weekly and monthly trades

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Major events that may affect your portfolio

In 2008, the bankruptcy of Lehman Brothers was a major turning point in the financial crisis. It shocked the financial system, caused a domino effect across the world, and led to far-reaching changes in the way the industry is regulated.

Right now, it looks like FTX is doing the same for crypto in what has been a crazy week for the industry. In a matter of days, FTX went from a $32 billion valuation in January this year to venture capital fund Sequoia Capital, bringing its $214 million investment in the company down to $0.

The full story details are complicated, and we’ve covered the story so far here. The short version is that early investor-turned-competitor Binance has announced that they will dump all of their $529 million of FTX’s own token – FTT.

This caused a run on the platform as customers feared a liquidity crunch, which turned out to be well-founded.

Binance then offered to save the day with an emergency acquisition (for an alleged amount of $1), before pulling out of the deal the next day, citing concerns about their business practices and an investigation by US regulators.

Unsurprisingly, all of this drama caused the crypto to plummet. Over the past five days, Bitcoin is down nearly 20% from its already low levels, Ethereum is down more than 20%, and other coins such as Chainlink and Ripple are down by similar amounts.

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For the first time in a long time, we have seen a significant reduction in the rate of inflation. That’s right, for once we’re not going to talk about record highs in the rate of price increases, with the overall annual rate of 7.7% now the lowest since January this year.

The October figures are 0.4%, a considerable difference from the 0.6% that analysts had expected. Core inflation, which excludes the often volatile food and energy sectors, slowed significantly from the previous month, rising 0.3% from 0.6% in September.

This is really good news from all points of view. This shows that the Fed’s series of record rate hikes is finally doing its job and is also likely being helped by a global supply chain slowly returning to normal.

It also increases the likelihood that the Fed will be able to slow the pace at which it has raised rates, as Jerome Powell suggested it would aim to do after the last FOMC meeting.

The market reacted to the news with lightning speed. The S&P 500 had its best day since 2020, opening more than 3% and climbing to end the day up a massive 5.5%. The NASDAQ 100 was even better, ending the session up 7.4%.

This week’s flagship theme from Q.ai

One person who will likely be particularly happy with the focus on crypto markets and inflation numbers this week is Mark Zuckerberg. His announcement of thousands of layoffs affecting around 13% of Meta’s workforce was pushed back, but that doesn’t make it any less of a big deal.

This has been a major theme in tech this year, with many companies downsizing after growing too quickly during the pandemic bull run. The list of companies that have reduced their numbers this year includes Stripe, Spotify, Coinbase, Lyft, Snap, Twitter, Peloton, Shopify, Netflix, Robinhood, Tesla and Microsoft.

Yeah, not bad.

You might think this is bad news for their stock prices, but you might be surprised. Meta, for example, saw its stock soar nearly 25% this week. Depending on the reason for a series of layoffs, this may actually be a bullish sign.

Of course, in the case of a company like Peloton, there are real concerns about the future of the business. For companies like Meta, layoffs tend to mean a leaner machine and a greater focus on profitability, for a company that is unlikely to disappear overnight.

So after a year of forgetting about tech stocks, things might start to look up a bit. One of the ways we help investors is by using AI to predict and rebalance exposure to different industry verticals on a weekly basis, with the goal of generating the best risk-adjusted returns.

The AI-powered Emerging Tech Kit aims to predict the weekly performance and volatility of a universe of tech ETFs, big tech companies, growth tech companies, and cryptocurrencies via public trusts. It then automatically rebalances investors’ funds, to provide the best combination.

Best Business Ideas

Here are some of the best ideas our AI systems recommend for the week and month ahead.

Hudson Technologies (HDSN) – The green technology company is one of our Best buys for next week with an A rating in our Quality, Value and Growth factors. Revenues have increased by 78.2% over the past 12 months.

Heart Ray (BEAT) – The digital health business remains our Next week crop top with our AI giving them an F in quality value and low volatility. Net profit was -$8.94 million in the 12 months ending June.

Intrepid Potash (IPI) – The fertilizer manufacturer is one of our Next month’s best buys with an A rating in our growth and technical factors. Revenues have increased by 50% over the past 12 months.

Majpixy (PIXY) – On-demand work company is one of our Next month’s best shorts with our AI giving them an F in terms of low volatility and quality value. The company has lost more than $40 million in the year to May 31.

Our AI’s Next month’s top ETF trades is to invest in Spanish and German equities and US small caps and to short consumer staples. Best Buys are the iShares MSCI Span ETF, the Schwab US Small-Cap ETF and the iShares MSCI Germany ETF. Top Shorts are the iShares US Consumer Staples ETF and the Vanguard Consumer Staples ETF.

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