Transcription
Week for AI. Uh, I'm going to take you through how it's basically impacted everything. Uh, and I'm still going to basically say, uh, very few people—since this is what I do for a living now when I'm speaking to people—fully grasp the importance of knowing as much as they can about artificial intelligence. And it's moving so quickly. It's having such an impact on obviously the stock market, obviously our lives, but also the tariffs. I'm going to make the argument today that, la, basically AI ended the trade war, um, this week; rare earth just ended the trade war. I'm going to go through a bunch of this stuff.
So, uh, I'm not reading these anymore because you guys can pause it. I like the way it came out last week without me needing to do that. So, uh, S&P, I mean, the chart looks great. Another great week for stocks. We're going to hit all-time highs soon. We closed above 6,000, just above 6,000. Uh, you know, the crowd that was looking for a retest. After I go through what I'm going to show today, I would just make the argument that you better come up with a new strategy, at least for the near term.
Um, finally, uh, we've got a reverse head and shoulders, slight breakout of IWM. It's just one day, but I think this is what you want to watch. We're still below the 200-day, but we're seeing it broaden out now. Uh, where IWM is being dragged higher. Uh, again, they have had earnings growth in small caps. So there is just a valuation bump in this stuff that if the equity market's going to go higher, you're going to see all of them go higher.
Uh, rates, I'm just showing this because, again, even with these little bounces, you'll hear people now talk about it. We got 10-year rates back up to 450. We've got 30-years just under five. Uh, you know, it hasn't mattered. And just so everyone hears, so if everyone wants to basically do—Goldman put this out, Neil Stephy again does good work—puts out the stuff that I think is important. Uh, but showing—meaning annual S&P returns dependent on where yields are—it doesn't matter what the yield is. Equity markets uh do well, particularly in a world where earnings are growing.
Uh, the dollar is the one thing so far. We'll see where it goes from here. Uh, another, you know, weak week given everything that's going on, but the dollar just can't bounce at this point, regardless of the mean reversion. We've seen a lot of other trades, even if it was only for a short amount of time. The dollar can't do it.
Um, commodities, uh, you know, I've I've focused a lot on the embodiment side. That's what a lot is going to be on today. I think you got to watch commodities going forward because it was silver, it was copper, uh, crude's trading better, uh, despite all the supply numbers that have come out from OPEC plus. Uh, if you basically—you're up sharply since then. So, with everything going on, uh, you still have this happening. Silver, highest level since 2011. Uh, copper and silver going up together. I think this is part of the electrification trade, which I think is starting to uh become a bigger part.
Uh, sentiment, a, AI, uh, unchanged from last week. The midline there is zero. We are still more bears than bulls, uh, despite the fact that we're sitting back up near our all-time highs. Uh, this is the AI—or no, this is the Investors Intelligence. This is your Denny. Uh, again, we are barely above the lows of when we came in of 2022. We're barely above the lows of when we came out of 2016, coming out of COVID. It just doesn't matter. Sentiment is still horrible relative to where it should be.
Um, in terms of what's been working, this is uh the revisions factor, market neutral. Uh, it's sector neutralized. So, uh, you're still getting winners in terms of, uh, where revisions are moving higher. Uh, you know, I wrote this piece back on April 3rd. Uh, I'm highlighting in here the importance of this. Uh, I just want to remind people this is like a a very long paper. Uh, I want to emphasize the fact that this was all on what's happening in terms of shifting from a world of software to a sh—a—a world of hardware where embodied AI and just machinery with intelligence is coming and how important this is and the escalating power demands of AI; seismic shift looming on the horizon; electricity consumption; the sheer scale of infrastructure needed for this revolution from data centers, semiconductors, energy and cooling. Uh, all of this is where you wanted to have invested.
Um, I want to emphasize the point that Mark Andreessen gave an interview this week at the Reagan Foundation for the National Economic Forum, and he basically went right at robotics, talked about it uh extensively. Uh, the shift to robotics today—AI is software, but there's another turn on AI that's coming, which is—turn to embodied physical AI—predicts robotics will scale massively in the next decade, becoming the biggest industry in history. So remember, Mark Andreessen has had two really good calls that if you just focused on this since technology and the digital economy basically took over the world, and remember he was with Netscape, so uh, "Why Software Is Eating the World" was written in 2011; if you just went out and bought the mag, you know what's happened. Then he wrote this in 2014. He did a Washington Post interview just in the months after basically saying—calling this the most important uh innovation in terms of why Bitcoin matters aside from the internet and the personal computer from the digital economy perspective. So now Andreessen's talking about embodied AI. So I'm going to keep talking about and going through it.
The reason this is important and the reason I think every single person has to spend more time on AI is they keep falling for BS. This got people out of AI. I I still don't understand how these two got people out of AI. But you have to remember that these things came after this. Everyone was bailing out of stuff. And I still get questions saying, "You don't think this is hype? You don't think this this is the easiest investment trade I've ever seen in terms of it will be accelerating over the next five years. Accelerating, not slowing, not running into caps, not having something. There is a race to spend as much money, and it shows up on everything. This is where people need to focus their attention. This is not technology. This is a disruptive technology that has the crosshairs of all coding companies in its eyes. This is about infrastructure. This is about semiconductors. This is about hardware. This is about computers, phones, humanoids, everything you can imagine, including the military of the future being built. And that's where the rare earth part is going to come out.
Just remember when Coreweave was collapsing in terms of the IPO, not knowing where to go, and then just go look at where the stock price is now and what's gone on and the deals that have been done; the amount of things that people have been wrong about that are writing research reports that are talking about this stuff. You have to get involved in this yourself to actually understand what's happening. It is a powerful, powerful trend with explosive stuff to come. The AI pair, winners versus losers. You can see that since the lows, the AI trade has been working again, but we've been consolidating now for a long time. You had the Constellation Energy jump. So when people are questioning if the Mag 7 were going to continue with their spending, and Meta raised their spending both in December from November, and then they raised it again at their earnings, and now they've done a deal with Constellation, who had done a deal with Microsoft a year earlier. We don't have enough power. We're trying to secure power, and not a surprise that the Goldman Sachs power index is already back through the highs.
Semiconductors. Uh, the orange line here is the SMH. The white line here is the S&P 500; semi-conductors and equipment stocks. Uh, I just want to say this again and again. First of all, you're getting the chance to get into something that is unchanged over the last year. If you go look at Nvidia's earnings and see what have happened, the stock is effectively unchanged at some point during July. So it's not too far off of a year. This is the beginning of an explosive move. I've written extensively on this. It's going to be spreading. Micron has been one of the names that I've mentioned repeatedly on this and on POMP as the one that high bandwidth memory as we move into inference. I went through that with VO last week. You have more and more of this going on, and this is not including these names. So I don't see this as being as good for the Mag 7 as it is for the infrastructure side because I think multiple compression will continue to happen. But more importantly, Apple has screwed up the AI situation. Tesla right now has other events going on, or else I'm I'm sure it would be up just on the speculation side of its robotic side, but Tesla's a robotics company. Tesla's an AI company. Tesla's a battery company, a solar company. It's not a car company. You're going to see some of these go higher, some of these go down. Obviously, Google's had a hard year because of their search business under attack. Apple right now, they can't get anything together. It's amazing that you can't use Siri still. Uh, you've got some that are up. It's been a mixed year, and I think this is going to be the way the Mag 7 are going to trade. I just don't see it as the same thing.
That being said, you cannot be bearish the equity market if the MAG7 are just seeing an earnings surprise which is as big as any of the things in 2013, and this was coming out of a recession. Again, profit margins, profit margins, profit margins. Robin Hood is just a perfect example of a of something that is retail, the new modern generation, uh, in terms of the way they trade, the way they get involved. People faded retail. It's a representation of retail. It's also a representation of crypto. Crypto is starting to impact the market as well. We saw that with Circle, which I'll get into later.
Uh, and I just want to bring up something because this week from three different groups of people that I was doing presentations for, when asking questions about AI, I keep getting the hallucination side. I'm going to hopefully nip that in the bud on this one. But for people who don't use it regularly or think about hallucinations, this is a this is a hallucination. This is garbage. Strategists taking down their numbers at the lows. So this is on April 24th. These are human beings making stupid forecasts based on the tariffs. And I do say stupid. What is the point of reacting to something ever? So when people say that AI has hallucinations, I don't even know what that means. Are there mistakes that humans make? Are there forecasts that they make that have nothing to do with the truth? Yes. There's nothing about that that happened. Recession calls. We live in a world of hallucinations constantly. Deep fakes, fake news, everything. Everything that we hear from human beings on the markets is complete and utter garbage right now. And it's because they're following data of the past. The next time I hear a recession, I will do the same thing on it. I read Twitter all day long, and I cannot believe how many people are still talking about stupid things like recessions. So, I'm going to keep going off of it.
The one thing that is happening from AI, job losses continue. Microsoft, after we just went through showed them cutting people a couple weeks ago, they're firing more people. Again, AI is starting to have an impact. Walmart is supercharging revenue, but with fewer workers. This was on the FT front page. Here's the ADP number. Five-month average has now gone down uh consistently, and the most recent number was 30 something. Down here you've had two months in a row below 100. So we're seeing weakness in the payroll markets. Uh, the NFIB showing weakness. I showed last week a whole bunch of things. The only reason I'm showing this is because now we're even seeing the claims, the four-week average of claims. Here was the low of the year. Here's now the high of the year. It's still at very low levels overall, but there is no doubt right now that the job market is weakening. I will say right now there's no recession coming, but the job market is continuing to show, and there's going to be a transfer unfortunately from workers into profit margins. So corporate versus labor will continue to have this thing, especially since the tariffs have come through. We don't have that strong of an economy, especially for people in the bottom 50%, which means that it's going to be really hard to pass through all the prices. And if you can't pass through all the prices, then if you're eating it, you're going to replace it and find a way to bring more AI in and replace people.
Here is the uh the the job numbers for the week in terms of the aggregate. Uh, again, we're still in the middle of this. It's obviously softer than here, but the aggregate payroll numbers are still in the norm of what they were in the prior decade post the GFC. Uh, just some other—the hiring thing—it—people are slow to hire. They're also slow to fire. It's that world where people are just trapped because they don't want to hire anybody anymore. Uh, forecast consensus is starting to come in. We've now got expectations of down near 60,000 towards the end of the year. Uh, that's mostly from the slowdown side uh in terms of the way people are talking. I think it's from the AI side.
Now I want to break down the payroll numbers to make sure that everyone sees what has happened this year. So this is the monthly payroll numbers so far this year. So in December we had 323. These are after the revisions. 111, 102, 147, 139—very clear. If you go to this line—education and health and services—what you notice is consistently 60 to 100,000. In this most recent number, you have 87 here. Then you've got leisure and hospitality for the baby boomers. You combine these two. This is a baby boomer number. This is a baby boomer number. 135, 135. This is also a combination of Medicare, Medicaid, Social Security in terms of the retirees. This is what our government is spending money on. And to fade this is a problem. This is also why you buy Bitcoin because there's no way for the spending to go down because it's in these entitlements, which we just learned you can't get rid of. So this is where the job creation is. 100% of the jobs here. Uh, 90% of the ones here, 90% of the ones here. So when people are telling you there's a problem, here's the government since Elon Musk or since the inauguration, zero. Go through all of these other categories in terms of mining and lodging, transportation, there's nothing being hired here. When you go through information, technology, this is what we've been looking at. Zero. Financial services right now. They're still hiring. This, I'm sure, is going to start to slow down as well. So, I don't expect this to get better. There's not a recession because this is not a credit-driven—you have to fire people because the banks aren't lending to us or because our profit margins are coming down. This is the opposite.
Here are the jobs per month x healthcare and services and leisure uh survey. So, we're down to 33,000. Uh, this is a five-month average. So, basically what you can see is if I tape out those two areas, there are no jobs being created. Look at these numbers over the course of the last two years. It's lower than any period in here. This is what has happened is you're—you need more nurses. You need more social workers. You need more people to deal with the aging in the country. We have a shortage in them. We're not hiring other people, and we're gradually having people churn throughout the marketplace. So, this is not some great market, but at the same point, we still have a low uh unemployment rate, and we're going to stay there. This will be the next fear. I just want to get ahead of this because I started seeing these things. This is just total BS as well.
The housing market is weak. Commercial real estate is weak. Uh, commercial real estate is arguably much more weak than the housing market is, but you're starting to get people talking about it. So, I just want to get ahead because as rates go higher, then people are going to say that this is collapsing. Uh, we have house prices that are dropping in some parts of the country for sure. But now we'll get through uh how many of the properties have negative equity? Close to zero. That's where you start running into problems. And look where we were in the great financial crisis aftermath. We're up at 24%. Um, and we had a problem back then because we had a lot, lot of leverage. If you want to go through a 120-page report, so you can go see 120 pages of of charts, go to Apollo and just go look up their US housing outlook instead of wasting your time uh reading all these stories as people start the next doom and gloom thing. Uh, delinquencies of percentage of all mortgages sitting at all-time lows. Uh, yes, we have mortgage rates up here, but the average mortgage rate on existing homes is 4%, near the all-time lows or at the all-time lows. So, the fact that rates are up here, it's preventing or it's really making affordability an issue for younger people. I believe this is what is going to cause the printing press to be shown up this year. Uh, you want voters; people can't afford homes. The number one thing causing problems in home affordability is rates at this point. Go. 40% of houses in this country don't even have a mortgage. So again, not a big issue.
Um, all right. I'm only going to cover this for one second today because I think it's just mindless BS. Um, Trump tells—it must—lost his mind. Blah blah blah. This is the way I read this. I talked about this on Pomp. This just means more printing. The fact that Elon Musk could not find a way after all of the campaigning and things that he did, he got involved in this because he was worried that the country was going to go bankrupt. He wanted the deregulation to happen because he had moved from California to Texas effectively to get away from California. He didn't even make it in that role for more than three months, and then he ends up in an all-out fight with Trump. And the fight was started when he was telling the rep people in uh districts to fire the pe—the—the politicians who were allowing this bill to go through. That triggered Trump, and eventually it turned into something personal. I think this is just another sign—as Luke Roemen says—that the printing press has the only alternative. Elon Musk wanted to do what he did at Twitter, fire everyone. The problem is constituents and voters in this country. They may want change. They may talk about change. It may be something they want, but not on their pocket. And that's why the con—the—the politicians always end up, and that's why we end up in this situation. So, for us to turn it around, it's just not happening.
All right, let's get into the trade situation now and why I'm making a uh a call on this. Uh, maybe it's a hallucination, maybe it's not, but I just want to take you guys through the rare earth because I don't feel people realize what has gone on. Uh, this week we started to hear—as trade talks stall, Trump tightens pressure on China, new exports, be visa bans, Harvard news in terms of not allowing Chinese students to go there. And then around the globe, automakers race to find workarounds to China's stranglehold on rare earth magnets. China's rare earth export curbs hit the auto industry worldwide. These were news stories in Europe, in India, everywhere. This is not a US story. Remember, we were trying to isolate China after Liberation Day when Liberation Day wasn't working. Rates had shot higher. But there was something else that had happened that I had talked about uh back at the time when I thought that this was getting to a point that you can try to pull what you're pulling, but when you shut down global trade, there is something that you're going to need. China's rare earth gives Xi leverage in the US trade duel. It's going to prove to be an understatement. Uh, China's trade war gambit puts Trump on defense. Okay, this is the checkmate side of the big picture. China's control of global rare earth supply has left the US playing defense in a trade war of its own design. So I want to make sure that people can go do their own homework on this. So this came out from the Center for Strategic and International Studies back on April 14th. Ap—on April 4th, this is the Saturday after.
Liberation Day. So, China's Ministry of Commerce imposed export restrictions on seven rare earth elements and magnets used in defense and energy and automotive sectors in response to the tariffs.
Within this article, they go through a ton of different reasons that this is a major deal. Uh, are rare earth—what are rare earth—significant national security? Basically, everything in the military. So, the United States is already on its back foot when it comes to manufacturing. China's rapidly expanding munitions production, advanced weapons, and equipment at a pace five to six times faster than the United States. While China's preparing for a wartime mindset, the US continues to operate under peacetime conditions. It talks about the extreme nature of it being between 90 and 99% control of the rarest from China.
So, what happens this week? Trump announces rarest Magnus trade agreement with China. Uh, there is no deal at this point. There's just an acknowledgment that they have to go to the table. Which is why when the news comes out and it first says Trump says, "Yeah, I'll fly to China." Uh, yeah. And the Chinese papers say, "We she took the call from Trump." The whole situation of we're going to put tariffs in response. We'll go to 100. Okay, fine. You're going to 100. We're going to go to 140. Everything has changed. And so you look for dynamics in the market that impact—people are still thinking that the China-US side is going to break apart. The problem is that means the rare earth side—which I'm going to show you is critical—and we've been getting more and more stories about how critical it's become. So China approved on Friday temporary export licenses of rare earth suppliers to the top US automakers. That's it at this point. The rare minerals battle behind Rubio's ban on Chinese students.
So now we're going to bring Marco Rubio into this because he becomes important. So this Axios article made the point that the rare earth mineral is what drove this. Now you can go watch this video. Rubio spoke at the New World Gala. Uh, it's it it's not a long thing, or you can just go in and and to chat GPT and bring it up. But this becomes important in the discussion as you're trying to find out about rare earth. Uh, and I'm telling you, I've had more conversations with people. I remember I was on a trip in in London uh for a lunch and I had talked with people about rare earth being the reason for Greenland and Trump, uh, and I was laughed at and said that was all about military in terms of of that—I just don't think people realize how important AI is to everything and that the historical world like ships and battleships and stuff. This isn't about this. This is about a world of drones and humanoids and artificial intelligence and AGI. It has nothing to do with the things that you learned in textbooks; there was none of this. So all of that stuff has become almost useless in terms of thinking about the world or thinking about markets. What's driving everything right now, including decisions, is where things are going to be 3 years from now related to AI because it's moving at a pace that is 10 times. So for every year it's like 10 times of innovation, and this has become crit—critical—because as Mark or as Marco Rubio talked about, China has deliberately cornered the market of rare earth processing. This dominance gives them a global leverage since railways are essential key technologies, defense systems and electronics. The US and allies are now vulnerable to economic coercion because critical supply chains are dependent on an adversarial nation-state. This is what he said during this. Unless we fix it, the amount of leverage China will have on us will begin to constrain our ability to make foreign policy. If you listen to the entire speech, you hear him talk about how he didn't realize we were in this situation, that after 25 to 30 years of allowing China to take over this critical part of the future of defense, and again nobody understood how essential these elements would be. Rare elements are essential to high-tech industries and defense manufacturing. It's all in one country. So imagine if one country had all the oil. Well, this is a similar thing. And this is just to make sure. EU picks 13 new critical materials projects including in Greenland. Um, so the EU is basically now trying to make sure that they get their hands on it. Everyone around the world is is scrambling for this.
I wrote something for 22V on Brazil this week called the trade uh of embodied AI era dollar weakness of global trade ordering. Uh, I love Brazil in this, and one of the major reasons is the rare earth. If you want to get it, reach out to the 22V uh people to read more on it. Uh, it was good enough that it made the front page of a blog in in uh in Brazil on their financial side because I guess people aren't spending too much time being positive on Brazil. I love scenarios where I'm buying things uh at incredibly low levels.
Is AI driving demand for rare earth elements? The semiconductor that drive AI development require a wide variety of elements, some of which are hard to come by? Is supply meeting demand in this new technology? AI is changing the world. Technology for all its surreal qualities has a basis in the material world. That is the transformation we are making. We are going from the software world now to the materials world again to show it back to the man—Mark Andre—talking about it and that now is the time we're shifting from it. So the guy who wrote "Software is Eating the World" is now saying we're leaving the world of software and now we're getting into the world of embodied AI.
Uh, Amazon prepares to test humanoid robots for deliveries. It's all this week, guys. Uh, Waymo surpasses Lyft, on track to pass Uber in the next 12 months. Here is the chart. Market share of driverless cars in San Francisco. This will pass Uber in the next 12 months. They're spreading across the country. It takes a lot more rare earth and a lot more memory and a lot more everything for embodied AI. So the semiconductors and all the things we're going—we're getting into the hardware side. You're going to get into how important this is. Uh, AI will make everything so cheap it'll break the economy. Those who understand us will build generational wealth. Those who understand us will build generational wealth. This is part Bitcoin. Okay. Time is running out. Here's how to prepare yourself. So if you want to go read up on this, you can go there. Power CEO says US to lose race to China without new lines. Uh, again, we're getting to the point of we need large quantities of electricity. Uh, we are currently trying to set up an awesome trip to spend time on power, small nuclear uh plants, humanoids, and one of the massive data centers and go through this. I highly recommend that people uh start thinking about this stuff uh because I think this is going to be the investment theme for the next multi-year in terms of people needing to focus on it. Amazon plans to invest 10 billion in North Carolina to expand cloud computing. Satya Nadella's new AI battlecry at Microsoft—again now we're getting into the agentic side—which also takes a tremendous more power and compute—compute—compute—compute. Uh, China is already taking off on the agent boom. Manis is a Chinese one. I've used this. I don't think I did it on this, but I've used it and demoed it before. Uh, Perplexity CEO sees AI agents as the next web battleground. Again, this takes tremendous more compute for AI agents. McKinsey just put out a new report uh this week. The future of work is agentic. Uh, again, this is happening very very fast. And then PWC talked about the productivity grow uh in this uh a little more optimistic on the job side, which I tend to agree with—meaning I don't see this as a a decimation of jobs, but I do see this as critical.
Uh, the one thing I'm going to give you guys as homework uh if you want to catch up and at least hear someone who's brilliant talk about AI and the way the world's going to look. Uh, again I tried to listen to a podcast this week, a macro one. I made it through 10 minutes, turned it off—some guy around my age or maybe a little bit older, uh, going through the history of why the US is doomed, why the stock market is overvalued, and I just gave up after a few seconds because I've heard all the act before. Uh, I just can't listen to anyone unless they're going to bring AI into it. Uh, so as long as you bring AI into it, I'm happy to listen. But if you're going to talk about old stuff, uh, and not bring it up, this is worth more. He's not an economist. He's not a stock market person, but to see how he has a better view of what the world's going to look like a year from now, two years from now, everything else. That's why it's critical to go listen. So, go listen to that. The highlights, uh, AGI before 2030, the societal outlook, predict short-term job churn, which is what I think we're in now, but eventual radical abundance as AI fixes resource bottlenecks. Think fusion, think every possible thing you can come up with in terms of rare earth, everything. Urges schools to teach meta-skills: creativity, adaptability, learning to learn, and envisions personal AI, attention protector, shielding users from grabbing. Maintains that human creativity keeps its edge.
I just want to tell you, I get called out more from people to talk about how they can learn to use AI. As I've said, I use it all day long. It's impossible for me to figure out—I gave—gave up on how many hours because I use it for everything. Uh, everything I can't even describe—there's not a single decision I make in my life unless it's a guaranteed 100% that I'm making the decision I want to make where I don't use it—and very few people use it at all, and the reason is because of again this nasty word of hallucination, which Demis Hassabis refers to as move 37—the most famous thing in artificial intelligence during the AlphaGo side was a powerful example of a hallucination—AI coming up with something new. That's what makes this brilliant. That's why I love brainstorming with it all day long, verbally, verbally, talking to it all day long on my AirPods as I walk around, creating new papers, creating new thoughts, things that I do in this video, asking it if I want to get something from my own Substacks. I talk to it and say, "Hey, can you reference when did I—which which Substack post did I do that in?" Everything that I have, it has everything on the internet. So, I'm just going to continue to reiterate that if you don't want to do it for yourself, he brings through and says for kids, they need to be using it every day as well. If you want to have a job in the future and you're in your 40s, you better be using it every day. Your 30s, you better be using it every day. Your 20s, you better be using it every day. If you don't care about yourself, but you care about your kids, they need to be using it every single day. And to do that, they need to see you using it and not saying, "I want you to write this thing. I don't want you to sit there and go through it." If you like the stuff that I do in Substack, those are all brainstorming with AI. I come up with the ideas. I do the majority of the writing, but I create every paragraph. I create the theme. You have to start realizing that that's the most important thought: imagination, hallucinations, their imagination. I had a prompt put together. Here's a prompt template you can copy and reuse to help one. This is just when you do anything uh research, deep research, and you want to check the hallucination. Just go in there and say, "Can you check this for me?" And this is—I created a prompt for it in two seconds. I create prompts every single day or I have it create the prompt for me. And then when I write—when I have it do some research for me and it comes back with a 20-page report, I will then put this in and go, "Will you please fact-check this exact thing?" and then it'll come through and if there's anything in there that it can't find or it doesn't know what's—or it's fact-checking—it's going through it, which means it's just taking more time on the stuff it will help—it will reduce it—they're already being reduced as it is now—I just want to do a little bit of work here for people because I've started to do this on the consulting side uh for 22V—if other hedge funds, asset managers want to go through it—I think the majority of the software that you get is a waste of time—my own personal opinion—bringing this stuff and having it come in—this is about teaching—ing—people how to use it, and most of the stuff that you can get online is far better in my opinion, and you don't have to bring your own data in.
So Broadcom came out this week. They had just made new all-time highs. Uh, it's one of the semiconductors. I'm spending a lot of time. So at the end of it, I'm just having it go through. Give me all the highlights from the earnings call. This is in Perplexity. So it goes through it. So I picked this piece in here, the demand supply, because I'm interested. Demand for Broadcom's AI networking chips and custom accelerators remains insatiable. It's these types of words that I want to find because then I want to go find out. The company's AI network business grew over 170% year-over-year and now accounts for 40%. So, their stock is down because it was at all-time highs and it almost doubled. So, I want to go find other companies because what I believe is happening is we're going to now be spreading this to other areas. We we are entering the hardware side. This is no longer just about the software side where Nvidia and Broadcom had a huge advantage. I think we're spreading this out, and I want to go find other places. So, I go in uh for this comment uh about the 170% year-over-year for the Eastern ESP. Can you go give me other places that are likely to benefit? So, it gives me all these companies likely to benefit. Oh, one of them here is Cisco, which has been part of my embodied AI uh paper that I wrote a long time ago. So, I go into Cisco. All right, Cisco's on my list. Let's go in. How are they benefiting? And then you go through and you get all of the areas where they're seeing the same exact thing, where they're growing. But then you also find out where else they're growing from. They're also growing on the cyber security side. So you're trying to figure out if a company that big has many areas where they're growing and where they're feeling the benefit from. For Micron, it had traded very well this week. I've been focused on it. Uh, it broke through 100 and then it headed all the way up to 110 today or this week. And it was a big week. Micron traded well this week. What are the main reasons? And then it goes through the things that had happened, changes that had happened, anything that happened during the week. All of this takes seconds. I dig deeper on it. I go do some more work on it. And then eventually we go through and create an idea. These are both names that were part of my embodied top-down AI piece that I did back in in April. These are now two ideas on the call spread side based on Cisco and Micron because we not only know that they're going to benefit, but what Broadcom said and what the inference paper I said is that we're in that sweet spot now. You can't do this with the banks. I'm sorry. They can't possibly keep up with the ability of doing this that quickly to generate massive reports. They're too busy with phone calls. There's too—going—there's a reason why I'm not going to an office. There's a reason why I'm doing this at home. I couldn't possibly work in an office and be able to do as much work as I'm doing. So, if you guys want some help, I've been doing some presentations on how to use Perplexity, how to use AI, how to use these prompts, how to think about things, how to take Bloomberg charts, put them into AI, have it analyzed for you. Uh, we're still using John Rogue because John's good and John goes through it. We combined on this Cisco and Micron and we added this in. So you can get a complete picture as a portfolio manager that you had to depend on your trader and your analyst and you can have—you can go do all this work yourself or the people that work at your firm can get better at it and start using it where they're quicker and it gives them more time to follow more names and to do the work with inside this incredible tool that's real time.
Uh, Bitcoin—final part of the week—Bitcoin been consolidating—you traded back to the 50 for some reason. You had this lawn Mustang. We broke down, came right back up. Uh, the number one thing in my opinion that now is holding back Bitcoin from the next break, which will come higher, uh, is the fact that the utility tokens, the innovation tokens, the ones that are really going to benefit the most from the network effects of stable coins have not jumped higher yet. Uh, I think this is a hangover from the 2021-22 period. This reminds me in the fiat world of the post-.com bubble time where there were a lot of people—I know a lot of people that had left the banks and had left the um uh the regular jobs back in 2021 during that quote unquote yolo period uh were trading crypto. I talked about my son's time. But I know a lot of these people. They got involved in the markets. They got involved in crypto and they own a bunch of tokens that uh had collapsed. They bounced, and I just think there's an overhang. That's what happened in the .com bubble. Uh, lots and lots of businesses are in that trouble. We just have not had a big move. And if you do charts of these names, this is Ethereum related to Bitcoin. They're all sitting at lows. I don't care which one it is. There's been nothing really that's gone higher except for Fartcoin. Uh, everything else that was around pre uh 2022 has had a really hard time, but we failed at the 200-day moving average, and I think we're getting closer to breaking out. Uh, Solana's had the same type of thing. I'm looking at the 200-day moving average is important. I think the catalyst is coming. One of the catalysts is small-cap stocks. This is IWM overlaid with Ethereum. Uh, Ethereum held down here, but small caps broke through. They both have a reverse head and shoulders. They've both been correlated. I do think we're getting closer and closer. Uh, I wanted to just—I'm not going to go through all of these. Bitcoin to me is still going to have a major spike this year. That's my opinion. Um, I don't—I don't get paid for giving you guys advice on this stuff. Uh, but I do believe that Bitcoin is going to have a very large surprise to the upside. I'm not going to go through with the target, but between the macro reasons and the network effect, innovation reasons, everything lines up to me with government support—everything. So, you guys can spend your own time on it. But I do think it's going to happen. We had a major IPO debut this week with Circle coming through. Stock was up massively. uh, Circle IPO leaves 1.7 billion on the table. Seventh biggest underpricing in decades. You've had lots of of M&A and lots of stuff going on inside. In fact, every week I'm highlighting things that are just not happening in the regular world. The deals we're seeing in the fiat world are all related to power uh and people getting nuclear power. Here's the stable coin market cap. How do you not want to invest in something that's moving like this? This was the period back in 21 to 22 that I referenced. We saw stable coins go down. Then we started seeing them go back up again in the beginning of 2024. And now this is just highlighting the amount of size that is being built up. One of the most important things going on in the marketplace today. We have a bill that we're waiting for in terms of the Genius Act to get through. And then once that's through, we're going to have a bunch more stuff going on in crypto this year. uh, stable coins settled over 11 trillion in transactions, surpassing Visa. Uh, that was in 2024. Uh, AI agent stable coins in front of—I've—I've connected these two. This is why you get agents. Stable coin volumes.
Go up dramatically. Wallets go up dramatically. The digital economy ecosystem grows, and then Bitcoin grows. Bitcoin grows because there's going to be wallets that are being created for transactions rather than people hiding money. This is where we get the network effects. This is what Mark Andre talked about a decade ago when he wrote the paper on Bitcoin and why it matters. It's just starting now, which means 100,000 is still way too low relative to where it's going to be, even though it's becoming very quickly one of the largest assets in the world.
I will continue to highlight it in this the same way AI, for everyone who is still focused on: we're going to have a depression, we're going to have a recession, we're going to have this, we're going to have that, there's going to be defaults. This has all been about AI and crypto. The reason I do this is because of the only two frigging things that matter for you guys at this point. But you want to focus on what Ford is doing and what GM is doing and how we're going out of business. None of that matters. It doesn't matter. You have to focus on AI. You have to trade your way through it. But if you're waiting for rate cuts, or you're waiting for rates to break higher to 6% or 7% and think that's going to be the holy grail, by the time you're done, go figure out how much money it's cost to wait on that stuff. It just doesn't matter.
Last two charts, Senator Lumis has highlighted a pathway to build America's Bitcoin reserve. This came out this week, so we'll find out what eventually happens. And of course, Donald Trump Jr. says his family's all in on Bitcoin because they were debunked. So, when you hear the Democrats saying, "We want X and we want Y in this," the family is, uh, angry because they were part of the debunked group; fade them if you want, but he's going to be president for longer, and he wants Bitcoin to go higher. So, if you want to fade it, fine. But now we found out that AI has to be a hub because we're running out of rare earth.
So that's it for this week, guys. Uh, reach out if you want. I'm thinking about doing a video, uh, around AI and how to use it. It would be a longer-form thing. I would probably take some time, but I've had a lot of requests from people for themselves in the industry, outside the industry, and I think for their kids. Uh, I'm going to figure it out and work on it over the course of probably the summertime. But, uh, maybe it'll be out sooner.