Inflation, Stock Valuations, and AI FAQs

The report analyzes how Middle East conflict-driven inflation remains range-bound and explores the 'stretched' US equity valuations currently propelled by AI earnings optimism.

Key Takeaways

• 1.Global inflation is rising due to Middle East conflict and oil prices above $100/pb, but it is expected to remain within a manageable 2-4% range rather than repeating the massive post-pandemic surge.
• 2.US stock valuations (CAPE) are at historic highs, appearing 'stretched', but these levels are currently supported by a surge in AI-related corporate earnings.
• 3.AI is unlikely to cause mass unemployment; history suggests it will augment rather than replace workers, creating new tasks and demands for labor.

Table of Contents

• How much more inflation?
• ENERGY CPI
• FOOD CPI
• GOODS AND SERVICES CPI
• CONCLUSION
• CAPEd Crusaders
• Frequently-asked questions about Artificial Intelligence
• Q: WILL AI TAKE EVERYONE'S JOB?
• Q: WILL AI CREATE JOBS?
• Q: ARE LLMS ANSWERING OUR QUESTIONS?
• Q: IS AI GOOD FOR PORTFOLIOS?
• Q: IS THIS ESSAY WRITTEN BY AN LLM?

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