Halloween Hangover in 3…2…1…

Even though we haven’t concluded Halloween for this year, we are predicting a Halloween Hangover in the markets.

Why?

The markets are looking tired.

And despite the good news about the Trump-Xi truce and Amazon soaring to record heights (after laying off 14,000 workers), stocks like META (Facebook) took a big hit after announcing another huge increase in spending on AI.

Ironically (or NOT) AI is where the hangover effect is looming.

And while it’s true that AI is driving Cloud growth, the urgency for Mega stocks like Google, Apple, Microsoft, Nvidia, etc. to plow billions more into AI has gotten way ahead of itself the markets.

As a result, the markets tend to respond with whipsaw like moments over what seems like inconsequential news.

Cue Up:  A leaked memo detailed that Amazon will need 600,000 fewer employees in the years to come.

(This is in addition the 14,000 mentioned above)

BTW, 600,000 is a lot of unemployed people.

As a result, careful rhetoric will surround the shift as people fear AI technology.

Part of Amazons memo included:

“What we need to remember is that the world is changing quickly. This generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before (in existing market segments and altogether new ones). We’re convinced that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business.”

Translation:  This is a classic case of Joseph Schumpeter’s theory of creative destruction at play.

Because innovation is paving the way for new technology while leaving the past behind.

Halloween Hangover

The idea of creative destruction is spooky…especially for those who are slow or unwilling to adapt/change.

But it pays to remember that Amazon itself and online shopping paved the way for the destruction of the brick-and-mortar stores.

Using history as an example, the horse and buggy were replaced with automobiles…after being met with huge resistance.

But as they expanded, the suburbs came alive.

As a result, suddenly, people could live in places without trains.

The markets always sense these changes while factoring in a letdown/pullback especially during a frenzy like we’re seeing today.

And Creative Destruction Waves cause unemployment to rise, but commerce eventually expands.

The shift from humans to AI is happening right in front of our collective noses.

And this will disrupt the system.

But the world will adapt as it always does.

So, learn what sectors of the markets benefit the most from Creative Destruction in our upcoming November newsletter (HERE).

Share this with a friend…even if they have said in the past, “I wish invested in Amazon back in…”  They’ll thank YOU later.

And tell them:

We’re Not Just About Finance

But we use finance to give you hope.

“And you shall know the truth, and the truth shall make you free.”