Stocks just wrapped up their best week of the year, led by an especially strong rally in AI stocks.
Why? The answer is simple – the Fed.
They confirmed this past Wednesday that multiple rate cuts are coming this year. That opens the door for this AI stock boom to now go into hyperdrive.
You thought the rally has been impressive so far? You ain’t seen nothing yet.
The Market This Week
The market was worried going into this week’s Fed meeting. The Fed initially signaled back in December that three rate cuts were coming in 2024. That sparked a big stock market rally.
But, since then, inflation has consistently surprised to the upside and the overall U.S. inflation rate has stopped falling and instead stabilized right around 3%, which is above the Fed’s 2% target. Consequently, investors were afraid that because inflation is flatlining above their target, the Fed was going to walk back rate cuts.
They didn’t. Instead, they reaffirmed that three rate cuts are coming this year.
Just as important, Fed Chair Jerome Powell’s language shifted in his press conference this week from “we need to see inflation come down to 2% before we cut rates” to “we’re pretty confident that inflation is going to come down to 2% and so we’re pretty confident that we’re going to be cutting rates multiple times this year”.
He seemed entirely unphased by the recent relative “stickiness” in inflation. He shouldn’t be phased by it, either.
Going back to 1950, the “average” inflation rate in the U.S. economy is 3.5%. We’re below that right now. Therefore, even though inflation is stabilizing above the Fed’s target, it is more importantly stabilizing below the long-term average inflation level. Which, yes, means the Fed shouldn’t be worried and should proceed with rate cuts this year.
That’s exactly what they’re going to do. The Fed confirmed as much on Wednesday. And that is super bullish for stocks.
Learn From Recurring Market Patterns
Whenever the Fed cuts rates and the economy is still growing, they open up a massive wealth window for investors. It happened in the mid-80s, mid-90s, late 90s, and 2019.
Each time, when the Fed cut rates and the economy kept growing, stocks soared. We are about to get that exact same recipe this year. A wealth window is about to open up.
This wealth window is going to be particularly big in a particular subsector of AI stocks — and no, it is likely not any subsector you’ve heard of before. I’m not talking about AI chip stocks. I’m not talking about AI software stocks. I’m not talking about AI robotics stocks.
Instead, I’m talking about a different type of AI stocks that — thanks to a unique and powerful confluence of factors, including a very monumental shift in federal government policy — could soar the most of all AI stocks once the Fed starts cutting rates.
Right now, before the Fed does cut — is the time to load up.
The Final Word
I plan on sharing this subsector, along with other extremely timely information about how to invest before you miss the boat on Wednesday, March 27, at 8 p.m. Eastern.
During Wednesday night’s briefing (reserve your spot now by clicking here), I’m going to discuss my top six plays for Washington’s “AI Blitz,” and I’ll be giving away one of them, completely for free.
If you’re interested, you should reserve your seat for my presentation on Wednesday night, where I’ll unveil this system and even give you a free stock pick that it just flagged as a “Strong Buy” with huge short-term upside potential.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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