The 2030s Will Be a Graveyard for Fortune 500 Companies

And uh, holiday week. Happy July 4th. Let's just get right into it. Um, not a lot uh to go through this week, but uh definitely the stock market continues to surprise on the upside. Uh, we've powered through the highs. Um, I think I really thought we'd consolidate up here before we went through, but uh we've just powered through and continued at this point. And the chart again just looks fantastic. And uh, the S&P strong breath makes a new high as well. Uh, and again it after this fall here it went back through the highs. That's the NYSE breath. I've shown the S&P 500 breath which was stronger for most of the time. So we're finally starting to see some of the small cap stocks head towards the highs. Uh, it's not just in the US. Of more than half of the world made new highs last week. Uh, best reading in over a decade. Sentiment has finally gone back up. We now have uh uh starting to see some of the indices get to in this case the highest level in over a year. Uh, AI most bullish since December 20 of this year. You've got uh high levels in the CNN fear and greed. RSI up SPX eight straight days of touching the upper Ballinger bands. Uh, distance of S&P price relative to its 50-day moving average highest since 2023. So, it's been a strong market. Um, and sentiment has obviously fallen has continued through.

Now I want to shift into we're going to get into the earnings uh the in two weeks and I think this is the most important sector to watch. Uh, we've had technology be a strong uh leader since 2022. Uh, the mag 7 is underperformed this year as we've seen a broadening out. This is the agentic switch, the inference switch, the reasoning switch. You should start seeing AI adoption accelerate. And that means that we should start seeing profit margins expand in some of the other sectors, particularly with inside the S&P 500. And the one that I'm focused on right now is the BKX and the bank sector. Um, you've had a powerful move the last two days to at least get back through the highs of this year, but we still have not taken out the highs from 2021. Uh, and I think this is the most important thing to watch and obviously banks lead us off. Uh, JP Morgan in particular is the one I'm going to be watching. I'm going to go through uh some of the reasons. It actually closed above its Ballinger band this week. So maybe maybe it gets a little bit of a correction after the earnings. But JP Morgan has been very public as I've shown in prior videos about being very focused on on AI. Um, and in particular JP Morgan is telling its managers slow down on hiring, asking people to resist headcount growth where possible and increase their focus on efficiencies. At the same time, I also highlighted that $18 billion is their overall budget, which included an increase of 1 billion uh over the last year. Again, they continue to talk about headcount and how much it's grown recently and how much they want to focus on not hiring.

There's another trigger, though. Um, last year in September uh we talked about how if there are rate cuts and no recession it is extremely bullish for the market and in particular the sector that the sectors that tend to do the best which are out here. This is when there's no recession cut. This is when there is a recession cut um banks tend to do the best or at least the financials. And so we're sitting at a point where you're starting to get more and more talk about the rate cuts. And I think this is becoming a a more important theme going forward. Not just the fact that we're getting more commentary on the rate cut. Goldman Sachs talked about it this week. And the reason that they gave behind it uh now believe Trump's uh Trump tariff strategy may not have as large an impact on consumer price inflation. I highlighted that the CPI from that report is the mo the most recent report unless something changes dramatically. This is where the surprise is even for me is that we just have not seen the inflationary forces uh this year. Forget just the tariffs. Uh this isn't an indication to me that whether it's AI, whether it's the distribution of wealth problem in the country and the fact that people can't afford it, whether it's um Trump's pressure doesn't really matter to me. The inflationary statistics and the trend in inflation no matter how you look at it is very straightforward inflation hasn't come through on the higher side and now we're getting the extreme pressure so again you think about the banks you think about them benefiting from AI but the other part if we don't get a recession and we get rate cuts and it's likely or at least possible that we see a steepening the yield curve which is what we saw after September meaning cutting into nominal GDP around four to 5% % but we're still getting the pressure here. And in in the case of this Fed share should be investigated by Congress. Again, I've mentioned PY again on the Federal Housing side. There just seems to be some stuff that'll be coming out on this. This was a public side. The last time we saw something like this was on Liberation Day, but this is a piece of paper that goes through all the countries in the world and where their rates are and why the US is being slow to move rates lower. Uh so you've had now public pressure. This continues and at this point I think you have to be uh on top of the fact that it seems highly likely that this pressure is going to lead to lower rates. Uh and more importantly the question is how low will they go once he has chosen his own fed chair.

So you are going to be making a bet on whether inflation is actually mean reverting back uh towards and then how low rates can go at a time when the government has chosen growth. We got the payroll numbers for this week. Um, basically you know we created jobs but the weekly hours and the average hourly earnings uh ended up giving us an aggregate payroll number of zero. So again the payroll market is definitely on the softer side. Uh it's there there's no doubt about it. That being said, the threemonth average is still in nonrecessionary territory. We're still creating jobs. Uh and we're not seeing a dramatic drop off. The unemployment rate, which was expected to hit 43, came back down to 41. uh more and more people and more and more papers are coming out about the impact of the labor shortage uh immigration but also just the natural trend of demographics and how we definitely have a labor shortage and you could actually see no job creation and the unemployment rate not move and that's what we're seeing as of now. The one part that I think people I've shown this before I haven't shown it the last couple months but I think it's really important is the diffusion index. So this is the threemonth uh at 53%. So this is the uh percentage of industries that are increasing jobs. So out of the 140 some odd thousand that were created in the most recent month when you go back over the last three and let's say we've averaged you know somewhere around 130 to 150. We're getting a narrowing of how many places are creating jobs. So during the peak of rehiring postcoid we got up to 83% of industries. So very strong breath. Now we're at 53%. And if you take this to the sixmonth, uh we've had a big drop off. So we're now at 52% on the sixmonth. And every time since 1990 that we've been at this level, we've been in a recession already. So there's a lot of people out there that I think are focused on this. This is one of the reasons why as well. Even though the number was okay, we still have rate cuts built in because of the lower inflation side and the payroll side. So for September, we're at 74% chance now of a uh of a rate cut. Uh we were at 25% for July, but with the Friday reading, we went fell all the way back to 6%.

Now, we had the big beautiful bill out and uh again, I I can't emphasize this enough. If you think about where we were even as people start to focus again on tariffs uh as we get to July 9th and some of the statements that Trump has made uh this is pretty we will make it all up 10 times with growth more than ever before. And that's why I really want you to focus on uh the trap that everyone fell for the first go around with tariffs which is uh they're focused on growth. It's the only way they can get out of this or at least attempt to get out of it which is why they want rate cuts as well. And I think that's where the focus has to be is that he is telling you he's going to focus on growth which is very different than the beginning of the year where pain must be had. They have to grow their way out of this. They'll get some revenue from from the tariffs but the focus at this point is to grow and of course that brought out Alon Musk. Uh if this insane spending bill passes the American party will be formed the next day. So Trump and Musk went out it again. uh threats of deportation, but the most important thing I think out of the bill that'll become a major story down the road is something we've talked about here in terms of power. So, uh there were parts and put in that are going to have an impact on the energy spending going forward and a Musk Musk came out and this is where he spent most of the time. This would be incredibly destructive to America. This is earlier in the week before the bill was passed. uh solar power in China will exceed all sources of electricity combined in the USA in three to four years. Just highlighting how important and Alon Mus has always believed that solar was the uh dominant part that should be focused on our biggest source of reliable power today is by is natural gas. Second biggest is nuclear and third biggest is coal. This is from Chris Wright. Everything else combined is like cavemen throwing little sticks into the fire compared to the sun. So Elon Musk was very specific this week in terms of what's going on and the focus has been uh it's a regulatory nightmare for energy projects. Uh so Mus says it gives out it gives handouts to industries of the past while severely damaging industries of the future. It's a strong progrowth bill. Taxing energy production is never good policy when oil or gas. In this case, renewables, electricity demand is set to see enormous growth and this tax will increase prices should it be removed. Uh this is where we are now. Uh you're going to start to really get into this in terms of the power side and the buildout side. uh when you get a bill of this size, there's going to be details that are missed in there and we'll see how this impacts the power. But as of right now, uh I would worry again even more so than the last month where we've talked about power based on the demand side, now we're getting into the buildout side, and I'll continue to say that if they're going to focus on fossil fuels at this point, uh the only companies in my opinion that are going to be able to be big enough to build this stuff for Chevron and Exxon. Uh Chris Camilillo earlier in the week uh and we've talked about this here how rare earth is the thing that ended the trade war with China. The US needs rare earth at any cost and I don't see China supplying enough without some softening on our chip export rules. One of the reasons why semis were a good place to be over the course of the last few months. Uh Besson says US hopes to see China magnets flow at faster rate. So again, China's using these as their negotiation tool. And then of course, what do we get uh later in the week? White House lifts chip design export ban in exchange for rare earth materials compromised. So that story is going to be there. I don't see it changing. Uh what is at an inflection point is commodities and it's not an oil thing. It is a power thing.

But most importantly, uh, Colin Fenton put this out this week. I highly recommend going to spend time, uh, at 22V. Colin is great on this, but he highlights a bunch of things. These are all pieces that he's done this year, highlighting on the areas. So, instead of just focusing on oil, he's highlighting natural gas. The refiners have done extremely well. He's been all over that. You've got copper, which is breaking out. Silver, platinum, uh, and then he's done a lot on silver this year. It's just a very electrificationdriven world at this point. Uh Google made news this week. It's it signed deals to buy fusion energy from Bill Gates back nuclear startup. Fusion is becoming much closer. I'll get into some of that as I go through this. So this is this week's must listen to uh Venod Kosla who is a incredibly wellrespected VC person over the last 20 years in Silicon Valley co-founded Sun Micro Systemystems. Uh he gave a great interview. I've heard him speak before. This is in with or in on the uncapped podcast with Jack Alman, Sam Alman's brother. Venod goes through a bunch of things, but I'm going to break down and these are his visions of what's going to happen. He has had a very high track record of predictions. He was a very early investor into OpenAI. So for the next five years, this is where the stock market, it's very difficult to be shorting it. It's also one where you don't know what's going to happen to the the government uh in terms of the budget deficit. But this is the reason why people should focus on this being the next five years of massive productivity gains. Uh it may not show up in in the GDP number the way that people uh think, but it definitely will show up in the profit margins. I'll leave you guys to to read this, but that's the next five years. Then in the 2030s, uh it starts to become uh crazy for for companies. The rate of fortune 500 company collapse accelerates dramatically. Uh humanoid robots obviously begin to displace significant share of physical and service labor. Fusion again drug disco discovery accelerates. Uh again, the social contract begins to break down. society. Society struggles to realign labor, income, and meaning. Now, I've talked about this a lot. This is when he believes it's going to happen because at this point, we're going to be accelerating so fast. I believe the conversation and the fears are happening right now and will continue to be there as it's as the labor market is just harder and harder to find work. Then by 2040, the need to work is eliminated um and we get into abundance. The reason I want whether or not you have spent time on this, this is 15 years from now on someone who's had a very high and he's not the only one, you know, Alon Mus, Peter Diamandis, all people I respect are saying the same thing. If we're 15 years away from that, the market starts discounting things and one of the things that it starts discounting right off the bat is the profit margin story and how long this is going to be. They might be wrong in terms of when this happens. Maybe it's 60, maybe it's 2050. The government will have an impact on that. But the one thing is the profit margins will be accelerating over the course of the next five years which is why everyone who's focused on pees as the main benchmark for valuation is going to be suffering horrible pain. Uh you have to focus on the fact that these companies will continue to have profit margins and you should have pees at higher levels. uh we'll see if the revenue if if what I think is going to happen which he gets into here these 2030s will be a graveyard for the Fortune 500 at a minimum you want to spend time on this incumbents view AI as a tool for incremental efficiency existing companies are incapable of full reinvention this is a really critical part which he goes through and it's something I've talked about as well um he did highlight the robotics will have their chat GBT moment in the next two or three years that's going to be a critical part where I think speculation will take over in the marketplace as people envision what it means for that for having humanoids not just as a multi-t trillion dollar industry but also from again the profit margins for companies as it spreads. What I wanted to say is the Fortune 500s will be replaced by a AI native startups. He goes through the past patterns. If these companies, these AI native startups never go public, this is what I believe is that you'll have public companies replaced by private companies, most likely tokenized. Um, but I don't think they're ever going to be public companies. You have to think about that. And this will be a brain twister for people, but this is why you want to be moving money into crypto because if I'm right, the startups will be all invested through the crypto world. That will be tokenized, not the public market. This is what I've talked about that Michael Sailor is on. The change in capital structure from the digital economy, the fiat system, the public markets the way you know it, the bond markets the way you know it, they will change dramatically. And that is the one place that most futurists never talk about. I completely believe there will not the public markets as an investment will continue to go down because they will be underperforming the AI native startup. This is the first person I've say the destruction of the Fortune 500 companies, the collapse of them. Spend some time on it.

Um, here's one of the public companies now, Cursor. Uh, basically this week, I've talked about Cursor a bunch of times. It's now an app on the phone. Uh, this month they hit a valuation of 10 billion, soaring past 500 million ARR. Uh, Cursor is probably the fastest company ever to 500 million in revenue. You can see it took a little over two years. I first started using Cursor last summer. It was a very small company. There's other ones like it. Uh, but an app building code editor. Great great app to uh get your kids on as I wrote about in uh in my Substack this week. Uh, the fear factor for Meta continues to grow. I didn't talk about this story last week because I had too long of an episode, but here we go. Uh, they're making a super massive bet on super intelligence. You've probably heard the stories. Uh, he's done this before and been successful at times, not successful like the metaverse. Uh, but he is all out to try and stay relevant. Zuckerberg has grown frustr frustrated that rivals like OpenAI appear to be further ahead than Meta in the AI models and consumerf facing apps current and former Meta employees. So Apple has not made any big jump yet. There's been rumors. Meta is not waiting around. They just said we're not going to go buy someone. We are just going to hire as many talented people. Alexander Wang who was from Scale AI who they bought 49% of the company which basically means it was takeover to avoid going through the the regulatory process from from being able to do a merge but here are all the people the hundred million um crews. So he's paying billions of dollars for people to basically try and catch up. It's competitive catchup. Fear of obsolescence, talent and data acquisition. Meta's big bet on artificial super intelligence is fundamentally about survival and relevance in a rapidly evolving AI landscape. The company's leadership recognizes that failing to invest at this scale. Risk being left behind as AI reshapes the tech industry. The fear of obsolescence combined with the ambition to reclaim a leadership position as a driving force. This is important just to be on top of because it shows the competition and just how much money uh is at stake here for these bigger companies which again the mag 7 has been underperforming this year. Not normal with the S&P at alltime highs.

I want to go back to this again. Forcing the Fed public the last time we saw something this is just continues the side that he wants rates lower and he's going to continue to pressure the fact this is this is a focus um Trump investment team is preparing a year yield curve control regime without saying the words no coordination no inflation anchor just bill issuance and Fed pressure and threats to producers uh activist Treasury 2.0 know, leave the dangerous thing alone. The strategy under consideration, starve the long end of the treasury supply, flood the short end with tea bills, pressure the Fed to cut, yell at companies not to raise prices. Um, these are the things that are going on on what he wants to focus on. He's the president. Um, the president's demands to end Treasury coupon issuance until the Fed sharply lowers interest rates reminiscent of

The worst EM regimes. All right, Bitcoin. That's where it all ends up.

If you're going to have a, uh, a president that, on the one side, is trying to grow his way out by basically having nominal GDP higher than interest rates that we're paying, uh, to debase our way out or to reflate our way out, then Bitcoin, this is one of the reasons why it was, uh, created. It's one of the reasons why it should be going higher. I've highlighted this before. We've been consolidating. We got back up to 110,000, and then we pulled back again. We're through expiration. So, I do expect us to break out and start to move higher. Uh, impulsive move here, impulsive move here, correction, impulsive move, correction. I think the breakout's coming, but from here, given that I am a believer in the network effects, uh, we need to see a broadening out.

The question has been for everyone, uh, what's going on with the selling? If we've got all this buying and we've got all the corporate strategy buying going on, we've got MicroStrategy buying every week, what's holding us in here? And there's a lot of conversations and since, uh, this is getting published all the time. There's a great transfer that's going over in terms of the people that were initially in it that are selling to new buyers, whether it's retail through the ETF or whether it's the corporate strategy. We're getting a shift in ownership. Uh, uh, RenaissanceMac put out a Jeff Grass Group put out a buy signal based on, uh, futures positionings in terms of, uh, large speculators being on the short side. Uh, this is where I think we need to again get the breakout.

All coins, it's been a bear market in crypto. All coins have just been hurt. Most of the so-called old coins, uh, are nursing steep declines. So, we need to get a shift. And the biggest of, uh, the non-Bitcoin coins and the ones that I, the one that I think needs to be going higher because of stable coins is Ethereum. I went through this last week. We briefly got back above the 200-day moving average and then fell right back below it. Uh, I've said before I'm Pomp, I'll continue to say it. I see a nice reverse head and shoulders here. I think we need to have two weekly closes above 2700 for a, uh, a breakout technically. That's what I'm looking for.

This week, you did get at least one part. Tom Lee, uh, is joining BitMoine. And whatever you think of Tom Lee, he has a voice. He's from the traditional finance world. He's been a big believer in Bitcoin, but now he's gotten involved in terms of trying to raise money and become the MicroStrategy of Ethereum. And I think more importantly than what he's doing is the reasons because we've talked about these stable coin growth. Uh, majority of stable coins are built on Ethereum. This would drive a massive increase in network usage, institutional adoption because the traditional finance world is about to participate in the stable coin ecosystem, including conversations of Walmart, Amazon. Uh, the tokenization of real-world assets is becoming a bigger thing. We had something with Robinhood, which I'll show. Basically, all of these different reasons, including contrarian opportunity, are the reasons why he believes it's a good time to do this. Uh, I happen to agree at this point. Um, Ethereum is really important for the environment and the ecosystem with the stable coin bringing the network effects and everything happening volume side there. Ethereum should be going. Ethereum is powering Wall Street's future. The crypto scene at cons shows how far it's come. There was an event there, uh, that's where again Vlad Tenev, the co-founder of Robinhood, spoke about, uh, moving into RWA. So the tokenization of real-world assets is coming soon. Ethereum hits 1.45 million daily transactions driven by layer 2 solutions. Ethereum has reached a significant milestone with daily transactions marking the highest activity since 2021 and signaling renewed strength. I highlighted this in stable coins, uh, all of last year that despite the fact that we had had a bear market, they had gotten all-time highs. Uh, I believe what is happening in Ethereum right now is the beginning of a breakout point for crypto that'll happen in July.

I think July will be the trigger point for this stuff. Partly because we've come out of expiration. These expiration quarterlys meaning March, June, September. Last year's big rally started right after September again when sentiment was really low. You have to start paying attention to the option market. I think there's a short squeeze coming. Um, if it is going to happen, I think it it should start in terms of getting through right after one of the prior expirations, getting away, and then causing some of the miners in particular. But I also think there's been a lot of, a lot of people that have been in crypto for a long time that have been shorting to collect income, uh, against their long positions. And I think there will be a squeeze coming up. Uh, this is just the Ethereum spot flows we're starting to see after, you know, a bad period during the tariff side which took everything down. You've also got the future short position. So overall for, uh, Ethereum in my opinion, we've seen now enough of a correction and I would expect that we're going to start to, uh, very soon here see the breakout. So watch 2700 for a weekly close above two weeks in a row.

Crypto is not a threat to the dollar. You had Besson out again this week talking about it, but most importantly, digital assets are one of the most important phenomena in the world right now. Yet, they have been ignored by national governments for far too long. And then David Sax spoke, July will be a big month with a bill signing for genius and clarity going through the Senate. So, we're going to have the regul, we're going to have the, the um, understanding now on the structure and we're going to have an understanding on the stable coin bill. So now we're going to have all of this going on which should move us to the next phase where Cynthia Lummis will try to move forward on some other items related to Bitcoin. Uh, we we'll see what happens with strategic Bitcoin reserve, the tax side in terms of transactions. Uh, but in the meantime, we'll just continue to move forward. Every week with Deutsche Bank aims to launch crypto custody service in 2026. Visa and Mastercard are racing to tame the 250 billion crypto threat. Tech firms and crypto startups are challenging Visa and Mastercard's dominance in digital payments with stable coins. They're responding again just like it is in AI where you've got Meta spending money. What AI and crypto are doing is disrupting the capital structure of the existing framework as Vinod Khosla talked about.

I cannot emphasize enough to everyone who's an investor to pay more and more attention to what's happening as your last chance in kind of crypto as an outperformer, uh, at a time where it continues to do well. You have to think about the future and what it'll eventually mean for public companies if more and more and more of the business of the world is moving to AI agents and to crypto and stable coins. China competition. So, in the same way that China's trying to compete with AI, uh, and power, now we're getting more and more of this. There's more, um, there's there's more China talk about needing to compete with stable coins as the US dominates the stable coin market.

And finally, Bolivia gripped by crypto fears, 630% year-on-year surge. All right, holiday-shortened week. Uh, enough news for there.