A “story of two economies” with Luke Lango… is gold breaking out or not?… how will CPI information are available tomorrow?… a cause for market optimism with Jonathan Rose
Right this moment, we have now a story of two economies.
There’s the AI Financial system, buzzing together with relentless momentum, booming innovation, and insatiable enterprise demand.
Then there’s the Every part Else Financial system — client, journey, discretionary — which is feeling the brunt of tariffs, financial uncertainty, and a pinch of macro paranoia.
That comes from our hypergrowth skilled, Luke Lango.
As we profiled within the Digest final week, there’s a rising divide immediately between the “haves” and “have nots” – each out there and in our society.
One of the crucial influential elements driving this rising divide is wealth generated from investments in cutting-edge know-how and synthetic intelligence. Luke, together with Louis Navellier and Eric Fry, name this divide “The Technochasm.”
Luke put some numbers on this final week which can be essential for all buyers to see.
Let’s go to his Innovation Investor Every day Notes:
As proof that you simply needto be all-in with AI, check out the revenue development charges for the Magnificent 7 tech stocks (firmly within the AI Financial system) and the S&P 493 (which contains some AI Financial system shares, but in addition a whole lot of Every part Else Financial system shares).
This quarter, the Magazine 7 is anticipated to develop earnings by 26%, versus simply 2% development for the S&P 493.
The identical dominance continues as we stay up for the top of the 12 months.
Luke writes that within the third and fourth quarters, Magnificent Seven revenue development is anticipated to run at 23% and 12%, respectively, whereas the S&P 493 is anticipated to develop earnings by simply 3% in every quarter.
So, we principally have the Magazine 7 shares rising earnings at ~20% every quarter, whereas the S&P 493 grows them at simply ~2.5%.
Again to Luke:
Inflation is at present operating north of two.5%, so the S&P 493 will basically have unfavorable actual revenue development for the remainder of the 12 months. Ouch!
For this reason we should be all-in with AI stocks. Every part else isn’t even rising in actual phrases.
Supply: FactSet / Strategas
Here’s Luke’s Technochasm-themed bottom line:
Overall, we remain bullish, but only on AI.
The bifurcation of the economy is very real right now. You have the AI Economy and you have the Everything Else Economy. The former is on fire and thriving. The latter is struggling and barely surviving…
We think the divide between the AI Economy and the Everything Else Economy will widen dramatically over the next 6-12 months (at least).
So… lean into AI stocks… lean away from other stocks… and get on the right side of history.
If you want Luke’s latest AI picks, they’re coming from “Physical AI” – including humanoid robots.
Last week, Luke – along with Louis and Eric – released their latest collaborative investment research package. It’s about how to position yourself today for the coming era of Physical AL.
Their Day Zero Portfolio holds the seven shares they’ve recognized as best-of-breed in AI-powered robotics, offering focused publicity to the following wave of AI exponential progress.
Is that this the gold breakout we’ve been ready for?
Let’s rewind to our July 29 Digest:
Since peaking in late April at $3,432, gold has been buying and selling sideways, unable to interrupt by means of resistance on the basic $3,430 degree.
Gold is setting up a bullish “ascending triangle” technical formation.This is a popular pattern used in technical analysis to identify potential breakout opportunities. It’s bullish, suggesting that an existing uptrend will likely continue after the pattern completes…
To trade this pattern, wait for gold to break definitively above the upper resistance line around $3,430.
Fast forward to this past Friday when gold futures hit a new high above $3,500 when President Donald Trump discussed tariffing gold bars.
Here’s Bloomberg:
The decision, if it remains in place, has sweeping implications for the flow of bullion around the world, and potentially for the smooth functioning of the US futures contract.
In the wake of the news, gold futures popped, breaking above resistance.
Here’s how that looked on Friday:
Source: TradingView
We’re watching closely but not jumping in yet
Remember, a price breakout alone isn’t necessarily a green light to jump into a new gold trade. For such confirmation, we want a significant and sustained increase in bullish trading volume.
In his Breakout Trader service, Luke has explained why outsized volume is critical for a new trade:
A common mistake traders make is overlooking the importance of volume, leading them to buy into a trade that appears to be breaking out on weak volume, only to see it fizzle and reverse…
For a [true] breakout, bullish price action is a requirement, but it alone is not sufficient. That rising price needs the support of outsized volume.
Luke likens volume to the wind that powers a sailboat. Even if you’re headed in the right direction, you won’t go far without enough wind.
It turns out, waiting for the follow-through of strong volume was the right call…
As we’re going to press on Monday, news is breaking that the Trump administration is now saying that tariffs will not apply to gold.
From CNBC:
President Donald Trump said Monday that gold will not face tariffs, knocking down a ruling by U.S. customs officials that bars of the precious metal imported from Switzerland would face duties.
“Gold will not be Tariffed!” Trump said in a Truth Social post. Gold futures closed 2.48% lower at $3,404.70 per ounce after the announcement.
Given this news, outsized buying volume hasn’t shown up, gold futures are selling off, and gold is falling back below its resistance line.
Source: TradingView
So, while we’re still bullish on a gold breakout, it’s not “go time” just yet.
We’ll keep tracking this.
The next clue about interest rates drops tomorrow
Tomorrow brings the July Consumer Price Index (CPI) report, and economists are bracing for another tariff-related uptick in inflation.
Consensus estimates from FactSet call for a 0.2% monthly gain and a 2.8% increase year over year. Stripping out the more volatile food and energy categories, core CPI is projected to climb 0.3% from June and 3% compared with last year.
Even though inflation is expected to come in slightly hotter, legendary investor Louis Navellier doesn’t see it being sustained or runaway. Let’s go to his Breakthrough Stocks month-to-month challenge from Friday:
Regardless of persistent makes an attempt to derail the Trump administration’s financial agenda, financial development with out inflation is totally anticipated. There are just a few the reason why I don’t anticipate inflation to materialize:
- An enhancing U.S. greenback
- Widespread deflation in China
- Decrease power costs from “drill, child, drill”
- Imports solely account for 14% of inflation calculations
No matter how the numbers are available, for the Federal Reserve, they received’t be taken in isolation. They’ll be weighed alongside the current disappointing jobs report, which suggests the labor market is shedding steam.
That report, alongside unhealthy ISM manufacturing information, led Louis to conclude:
We’re teetering on a recession right here, people, and I don’t like to make use of that R phrase, however that’s what’s occurring.
Now, final week, Louis mentioned {that a} September lower will occur as a result of rising financial weak spot we’re seeing. And that is now the prevailing opinion.
But when the approaching information – together with tomorrow’s CPI print – means that tariffs are reigniting inflation materially, Fed Chair Jerome Powell & Co. will face a troublesome choice:
- Maintain charges regular, risking further job losses, a inventory market meltdown, and an apoplectic President Trump…
- Or lower charges to assist the labor market, risking pouring gasoline on the fireplace of inflation that’s already exhibiting indicators of life.
All eyes on tomorrow.
Lastly, if the danger of downward volatility has you anxious, veteran dealer Jonathan Rose has one thing to be enthusiastic about
Briefly, inside President Trump’s not too long ago handed “Massive Stunning Invoice” is a retroactive change to how U.S. firms can expense their analysis and growth.
Jonathan says that this variation has “the ability to reshape company financials throughout a complete section of the market.” Although the market hasn’t responded but, he says it can.
Listed here are extra particulars from Jonathan:
Between 2022 and 2024, U.S. firms weren’t allowed to deduct their R&D prices all of sudden. As a substitute, they needed to amortize them — which means they might solely write off somewhat every year, dragging out the tax profit over 5 years.
Firms have been getting punished for doing the very factor we needs to be rewarding: investing in innovation.
However that each one modified in 2025.
The rule quietly flipped again. Now, U.S.-based R&D spending may be deducted instantly within the 12 months it’s incurred.
It doesn’t change income. It doesn’t contact margins. But it surely drastically boosts how earnings and money stream seem on paper.
And in markets, look is every thing.
This has the flexibility to goose earnings statements in a single day.
A large one-time tax break that ends in a significant raise to earnings has stock-price-moving potential.
However Jonathan says this isn’t being priced-in but – and that’s the place the buying and selling alternative lies. He simply dropped the names of 5 firms which can be finest positioned to learn from this tax change – not due to hype or momentum, however due to pure, clear math:
- Lyft Inc. (LYFT)
- Unity Software program Inc. (U)
- Snap Inc. (SNAP)
- Palantir Applied sciences Inc. (PLTR)
- Rivian Automotive Inc. (RIVN)
Again to Jonathan:
And the most effective half? These firms don’t want to vary a factor operationally. All they must do is present up with earnings below the brand new tax math… and the story adjustments.
That is what inventive buying and selling seems like in motion.
You’re not chasing headlines. You’re anticipating how the numbers will probably be learn — not simply how they’ll be reported.
You’re not in search of what the market is speaking about immediately. You’re positioning for what it’ll be pressured to acknowledge tomorrow.
This is only one instance of how Jonathan finds tradable alternatives. However discovering the proper alternative is simply the beginning…
There’s additionally draw back danger safety… how you can stay nimble in a commerce that doesn’t go precisely to plan… even how you can reap the benefits of curveballs, placing on new, worthwhile trades along with your current place.
Briefly, it’s about schooling. And that’s what Jonathan does on daily basis inside his Masters in Trading Options Challenge.
Again to Jonathan:
You’ve acquired nothing to show. You’ve simply acquired to be prepared to be taught.
And when you see how easy it may be, you’ll by no means take a look at choices the identical means once more.
Have night,
Jeff Remsburg
