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Economic and financial forecasts can be kinda like the weather. Sometimes, in the middle of summer or winter, when conditions are predictable and there isn’t any immediate danger of a cyclone, getting them right is pretty easy.
When it comes to interest rates, that’s about where we are right now. As was widely expected, the Fed raised interest rates at this month’s FOMC meeting by 0.25 percentage points, surprising practically no one.
And lets be honest, it’s nice to have a period without any crazy surprises coming from left of field, given the couple of years we’ve had. It also shows that so far, the Fed’s expectations are being met. Inflation is slowly coming down and while the economy isn’t exactly booming, it’s not crashing either.
The Fed’s quarter percentage point increase continues the slowing trend of rate rises we’ve seen over the past two meetings. After multiple major rate hikes of 0.75 percentage points, rates went up higher than they have at any time before the 1980s.
This rate slowed to 0.50 percentage points at the last meeting, and has now come down to 0.25 in February. The change brings the target rate up to 4.50 – 4.75%, and comes as inflation has dropped from a peak of 9.1% down to the current rate of 6.5%.
Still high, but slowly getting back to the realms of normality.
Further rate rises are still likely, with the members of the Fed in December predicting the target rate will peak at 5.00 – 5.25% this year.
It’s earnings season again and we’ve seen some big announcements this week. As mentioned a few weeks ago, the oil companies have announced huge quarterly profits and a bumper year overall. In fact, 2022 has been the most profitable year in history for Big Oil.
For example, the largest US oil producer, Exxon Mobil, announced profits of $55 billion in 2022. That makes them the third most profitable company in the world in 2022, with only Apple and Microsoft ahead.
Speaking of Silicon Valley, this week saw earnings announcements from many of the biggest companies in tech, including Amazon, Meta, Google and the aforementioned Apple and Microsoft.
Meta was the major standout this quarter, mainly because Mark Zuckerberg stopped talking about the metaverse for a change. The focus on cost cutting and slowing their aggressive investment strategy sent the stock price through the roof, gaining 23.28% on Thursday after the announcement.
Wall Street was less impressed with the rest, with Apple, Amazon and Alphabet stock all falling over 3% in after hours trading off the back of their underwhelming Q4 figures. Apple announced a decline in quarterly revenue, a rare occurrence for the company, which was heavily influenced by a shutdown in one of their Chinese factory’s.
Alphabet saw further falls in profits from ad sales and Amazon’s forecasts were pretty pessimistic for the coming months. The announcements also come amidst a constant stream of layoffs in the sector.
When Q.ai was acquired by Forbes, we gained access to some pretty incredible resources for our investors. One of the most valuable of these is data.
The saying goes that ‘data is the new oil.’ And while we’ve seen in 2022 that oil is still pretty darn valuable, the rest of the companies at the top of the profit tree generate all or much of their revenue off the data they gather.
When you’re selling products or services, the more data you can gather on your potential customers, the more tailored you can make them and (hopefully) the more sales you can make.
When it comes to investing, data is how you gain an edge.
To take advantage of this, we created the Forbes Kit, which leverages our relationship and the power of AI to build a Kit around the massive amounts of data and insights gathered by the platform every day. It allows our AI conduct sentiment analysis to see which companies are receive positive coverage and moving up in the popularity rankings with readers.
The screening process is then combined with our machine learning algorithm to asses and predict the risk and volatility of the chosen investment universe, before automatically rebalancing the Kit in line with these predictions.
And because we’re the only investment platform owned by Forbes, we’re the only one who has access to this data.
Here are some of the best ideas our AI systems are recommending for the next week and month.
Fair Isaac Corp (FICO) – The credit score company is one of our Top Buys for next week with an A rating in Quality Value and Growth. Earnings per share have grown +4.11% over the last 12 months.
Alnylam Pharmaceuticals (ALNY) – The pharmaceutical company is our Top Short for next week with our AI rating them an F in Quality Value. Earnings per share are down -21.89% over the past 12 months.
Catalyst Pharmaceuticals (CPRX) – The pharmaceutical company is our Top Buy for next month with an A rating in Quality Value and a B in Technicals and Growth. Revenue was up 43.6% through Q3 2022.
Paxmedica Inc (PXMD) – The restaurant company is our Top Short for next month with our AI rating them a F in Quality Value and Low Momentum Volatility. The company only IPO’d in August 2022 and hasn’t turned a profit over the past four years.
Our AI’s Top ETF trade for the next month is to invest in short term t-bills, large cap Chinese stocks and natural gas, and to short TIPS and senior debt. Top Buys are the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF, the iShares China Large-Cap ETF and the United States Natural Gas Fund LP and Top Shorts are the Invesco Senior Loan ETF and the iShares TIPS Bond ETF.
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