No. of Recommendations: 3
Wall Street’s Latest Bet Is on ‘HALO’ Companies With AI Immunity
Deere and McDonald’s have become darlings to investors worried about broad AI disruption After a three-year love affair with anything related to artificial intelligence, U.S. investors are flocking to the factory owners, fast-food restaurants and commodity companies that have seemingly strong odds of surviving the technological revolution intact.
Call it the AI immunity trade, HALO—for “heavy assets, low obsolescence”—or just another iteration of the jitters that have periodically rippled through markets since the AI investing boom began. The winners include McDonald’s, Exxon Mobil and tractor maker Deere. Left behind are the perceived potential victims of the AI revolution, a list that has ranged from wealth managers to software firms.
In the past month, the S&P 500 sectors for industrials, materials, utilities and consumer staples have surged ahead of the overall index, while information technology has slid and the Magnificent Seven tech giants—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla)—have languished. Through Feb. 20, the index’s consumer-staples sector has notched its best year-to-date performance on record. https://www.wsj.com/finance/stocks/wall-streets-la...That must be why my port keeps going up. I didn’t jump into the fast hype AI vision, the Saul’s SaaS, or the rest - mostly because I’m too slow nowadays ;) So my list of old, stodgy stalwarts keeps improving, even as the new “it girl” stocks find reasons to crater.
No. of Recommendations: 0
The HALO trade will probably be a one off like all recent trades. It is a tariff kickback.
No. of Recommendations: 4
It's an optimistic view. While the timeframe is opaque, it is clear that white-collar payroll as well as service personnel (like telephone-based customer support) are targets for using AI for cost saving (the list is rather long of impacted jobs). That means lower tax revenue to government.
If, hypothetically, 25% of national payrolls are cut, the macroeconomic fallout will be highly deflationary. While outfits, like Deere, might eke out a living on service contracts, there might not be enough spare change rattling around for McDonalds to thrive.
AI is a bigger deal in the effect on jobs than the industrial revolution, the Great Depression, etc. because there are no new job opportunities created.
The AI companies have the resources of nations and will do whatever is necessary to keep from paying compensatory taxes.
We are creating "Human V 1.5".
Jeff
No. of Recommendations: 6
It's an optimistic view. While the timeframe is opaque, it is clear that white-collar payroll as well as service personnel (like telephone-based customer support) are targets for using AI for cost saving (the list is rather long of impacted jobs). That means lower tax revenue to government.
If, hypothetically, 25% of national payrolls are cut, the macroeconomic fallout will be highly deflationary. While outfits, like Deere, might eke out a living on service contracts, there might not be enough spare change rattling around for McDonalds to thrive.
AI is a bigger deal in the effect on jobs than the industrial revolution, the Great Depression, etc. because there are no new job opportunities created.
Well, that’s one apocalyptic view. It’s also what car assemblers thought when Ford built his mass production line, what Luddites thought about the automated loom, in fact it’s what every threatened group thinks when a revolutionary new technology is introduced. (See: auto dealers & EVs). The reality is we don’t know what will happen, and it may be that bold new horizons open up as a result. Or, obviously, it may not.
What I am sure of is that people aren’t going to sit around and do nothing. They will continue to use their imagination and invent things, or work in the arts, or parent better, or do politics, or a thousand other things, and that somehow we will muddle along - and even more somehow, we will figure out how to pay for it.
We went from a society supported almost entirely by tariffs to one supported by the personal income tax, and along the way came up with capital gains taxes, sales taxes, corporate taxes, gasoline taxes and more, in spite of entrenched powers who would have preferred we not tax their products or businesses at all.
Just as I am sure AI will have many significant effects on society, I am equally sure it won’t be the downfall of the Republic. (The utter corruption here now might be, but that is a different thing.) I keep coming back to it, but there’s a song from a few years ago: “Don’t worry, be happy.”
After all, you can’t do much else anyway, right?
No. of Recommendations: 0
AI is passive.
When put into action much of the time it forgets or doesn't know the context.
The promise that it will do better is often hype.
No. of Recommendations: 6
The halo trade is probably just another flash in the pan.
The HALO trade is as old as markets, people seeking stability in investments not chasing the latest fad, looking for solid companies with reliable earnings and stable markets.
It is the exact opposite of “another flash in the pan.”
