Today = a critical day for stocks

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Yesterday’s Treasury auction sale was red-hot with the 10-year debt seeing a bid-to-cover ratio of 2.67. It was the highest since February 2022 — one month before the Federal Reserve began raising interest rates. Why? Investors anticipate that interest rates will go lower soon, so they want to buy Treasuries while the yields are high right now. The question is — what will be the reason behind the rate cut? A cooling inflation…? An economic slowdown…? The difference is big. A cooling inflation with moderate economic growth will be bullish for stocks. Otherwise, an economic slowdown might be bearish. - “The US Treasury market is finally smiling after many, many months with at best mediocre auctions,” said Peter Boockvar at the Boock Report. “Is the market sniffing out a softer CPI tomorrow? Worried about economic growth?” A 22V Research survey showed that most investors expect a soft landing where inflation is cooling with solid growth. The second-most popular scenario is a hard landing where the Fed cuts rates to simulate the economy. However, that scenario received three times less votes than soft landing. (Source: 22V Research) Today will be a big day for stocks. The CPI data will be out this morning, and the Federal Reserve will announce its rate decision and updated quarterly rate projections. Fed Chair Jerome Powell will also host a press conference to reveal his latest thinking on the economy. Wall Street is feeling good right now. Anna Wong at Bloomberg Economics believe that the inflation report will deliver a positive progress, and the central bank will cut rates in September. - “May’s CPI report looks to be encouraging, and will likely be followed by a string of similar reports this summer,” according to Anna Wong at Bloomberg Economics. “That should set the stage for the Fed to start cutting rates in September.” This comes as the S&P 500 is trading at its all-time high. So, the stakes are high for a positive set of news today from inflation and the Federal Reserve. Another AI Stock To Buy Right Now Today’s Stock Pick: Upstart (UPST) Yesterday, we gave you a dark horse AI play. I’ve got another one for you. Upstart is an AI stock to watch out right now. It is the leading AI lending marketplace which uses its proprietary AI to analyze credit risk and issue loans instantly. In fact, 90% of unsecured loans in the first quarter were fully automated. Meaning? There were no documents to upload and no phone call required for borrowers. The final approval happened in just seconds. From the lender’s perspective, there was no human involvement in the process (either to process or analyze the loan application). Isn’t that remarkable? Upstart is the platform with over 100+ banking partners to issue loans for them. These banks leverage Upstart’s AI models to analyze risk and issue loans. (Source: Upstart) Here’s the best thing about Upstart: It is not one of those predatory lenders who take advantage of low-income people with ridiculously-high APRs. Because it is more accurate than traditional lending models, it allows lenders to approve more applications at lower APRs. Upstart said it approved 44% more than the traditional model… while… lowering APR by 36%. Isn’t it neat? (Source: Upstart) Sure enough, this benefits minority groups. Upstart approved 35% more Black borrowers at 29% lower APRs than the traditional model! That’s a huge, huge difference. The number is even higher with Hispanic. They had 46% more borrowers at 34% lower APRs. (Source: Upstart) How is it possible? Upstart has more than 1,600 variables for the model to train on. There are more than 65 million repayment events (an average of 82,000 new repayments each business day), so the AI gets smarter every day. As a result, its risk profile is different than the traditional model like FICO. Upstart’s own risk grade shows that there is ~10x more defaults between highest and lowest grades. The FICO score had just ~4x more defaults between highest and lowest credit score. In other words… Upstart’s risk grades are more precision where it can predict defaults better. FICO score, on the other hand, is more like a “shotgun” approach. (Source: Upstart) The company had red-hot quarters, but the y-o-y quarterly growth rates have slowed in the last few quarters. Things are turning up, though. The recent quarter showed the first positive growth rate. Upstart had tough quarters because rising rates pushed down the demand for loans. Banks are getting squeezed. Rate cuts are coming which could spur demand for loans. This is the perfect time to buy Upstart just as it recovers. (Source: MacroTrends) Lastly, the market opportunity is massive for Upstart. It is expanding its home loans business. They are already in personal and auto loans. Small business is coming soon with a TAM of $895 billion. There is simply a long growth runaway. (Source: Upstart) Bottom line: Upstart is disrupting the loan industry with its AI platform. It may be one of the most successful AI companies right now. The best thing is, the more loans Upstart give, the smarter its AI becomes. It will be difficult for other competitors to catch up. This is the AI company to watch out for. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](