Bubbles, Parabolas and Speed Crashes: The End of Human Market Structure

Saturday morning. Um, first of all, thanks to everyone who's been reaching out, gone to the site, um, particularly the financial advisors, uh, and recently a lot of conversations with family offices and, um, it seems to be helping to get people to think differently. Um, today, the best thing you can do to help me is forward this along to anyone that you think should hear it. Um, I'm covering, in my opinion, something very important because it's become, uh, obvious that with all of these parabolic moves combined with the condescending comments that are going throughout X from people who have been wrong about tariffs, wrong about oil, and wrong about Bitcoin, and wrong about passive, and wrong about so many bubbles, quote unquote, and bubble thinking, that I just want to take you through this because I am not someone who is just uber positive. I try to bring you guys the differentiating facts in what's going on and hopefully, at the end of this, the tools that you need to do your own homework, and especially in AI. And I ask you just one thing for anyone who is negative on what is happening in the market. Uh, just ask them how much they use artificial intelligence. That's it.

Um, I'm trying to do this from a perspective of wisdom, everyone. And I saw something this week where someone called basically people either idiots for buying into this, uh, and professionals, and that was the word that was used, know what's going on. So I'm definitely a professional. I've been involved with markets for a long time. Many of you who are responsible for people's money or professionals as well. Uh, the word bubble gets used way too much. And so I want to basically spend the time at the beginning taking people through the Kindleberger book because we are changing the market structure as we speak and it's really important for people to comprehend what's going on because this is not some innovation. This is not railroads. This is not the internet. This is not the buildout of the internet. This is the buildout and scaling of intelligence that for every year going forward will change our lives and already has. And that's why I said if you're not using it, you're not a professional. You're actually someone who's still stuck in mania, panics, and crashes. Mania, panics, and crashes is about human beings dominating the market every day. Going forward, and this has been going on since the great financial crisis, which is why I brought up all of the bubble talk that has gone on since GFC. If you don't think every, the same people saying AI is a bubble weren't saying QE was a bubble and all of the other things that I mentioned, it's because historically, up until the great financial crisis, when the Fed started printing money and QE started happening, but also at the same time, we had the rise of exponential innovation. And for the only time in the history of mankind, we had a growth of companies that are equivalent to about $25 trillion bigger than most all countries on the planet, except for the United States, had no debt until recently. So now that they're taking on debt to fund the AI bubble. So it's not coming from bond issuance like telecoms. It's not coming from oil companies going out to raise money. It's actually coming from free cash flow or bonds at yields that are basically better than where the US is, with better balance sheets than the US government. This is not the same as before because mania's, panics, and crashes was about human beings. We made things for humans. We had no information between the two. So when supply and demand got out of whack, we had a problem. Supply and demand, we know everything that's happening. So we shouldn't have panics, manias, and crashes.

That being said, we absolutely have parabolic charts. Now, this one, you know, calling it a gamma squeeze. The one thing I notice is market structure has been changing. Guys, don't talk about this move. Just talk about how this has been trending. I heard this was a bubble back here. This is when we had COVID. Everyone sat at home. It started to trade like crypto, I heard, which is true. But it keeps m going higher and higher. And part of the reason is because retail trades differently than professionals. And the market has changed. The capital structure and the market structure has changed. And guess what? Almost all the money being managed by funds at this point, in terms of hedge funds, in some way, shape, or form, uses artificial intelligence as a major part of it. And I'll get into why that's so important when we go away from manx, mania, panics, and crashes. Uh, Cantro put this out again, another bubble chart, the biggest bubble chart, and this is the one that has everyone freaked out. I read someone this week, this is a bubble when you go from 20 to 125. And I agree. When you get this kind of move, which is far faster than anything that happened during the dot-com bubble, when you get these two sticks of something moving up, I agree that historically would mean that we'd crash all the way back to here because remember, we crashed all the way back. So, do you think Intel's coming all the way back here? If you do believe that, you actually believe that AI is going to fail and that demand is not higher than supply. We are going to run into problems. And I'm going to go through the way that I see this happening. But the issue is, and this is the problem with the memory that human beings have. Everyone who's a professional by definition is wealthy. They can't imagine missing out on something that they didn't think of themselves. So remember this whole thing. And if you haven't read this before, I'm going to read some of it, but this is Duck, the greatest investor, the smartest psychological person when dealing with markets. And basically, as you fast forward this whole story of how in 2000 he bought the top. Anyway, I pick up the phone finally. I think I missed the top by an hour. I bought six billion worth of tech stocks and in six weeks I had left Soros and I had lost three billion in that one play. You ask me what I learned. I didn't learn anything. I already knew that I wasn't supposed to do that. I was just an emotional basket case and couldn't help myself. We have all read that. It has an influence on me. It has an influence on every person that has managed money because that story resonates. FOMO is a very bad thing to have. The problem is in this period of time, if you just associate what's happening in a few names because it's not happening at the market level. The S&P 500 is up 7%, but we're talking about bubbles because they're isolated. I heard the same people saying that software was a panic move back in the first quarter and that continues to suck as an investment. So those same people, and I'm telling you, go into Twitter, the great thing is, go into X and if they said this is a bubble, I know it's a bubble. Just go back and see what they were saying about IGV in the first quarter. And most of them were saying, I'm shorting SMH here and legging into IGV. That is the story that goes on when you go back.

So here's my version of the book. We will consistently, as AI starts to take over, and remember, every day AI agents are managing the market. They are dominating markets and they will dominate the labor force. AI agents have no emotion. They have no memory of drug. They have one goal: make money. Human beings, especially people that are saying it's a bubble, remember, in their mind, they're wishing it's a bubble. They're hoping it's a bubble. I've said this for 16 years that the recession calls are hope because most people that have money make tons of money after recession. So they root for recessions. They're not the levered ones. They're the ones with lots of cash that when things collapse, they get to be value investors. If we stay in bubbles, if we stay in parabas, they never get an entry point. We do have speed crashes. And I do believe semis are going to fall. By the end of this, I'll tell you that I've now sold out of two-thirds of my Micron. I still think it's going higher, but I think there's other bubbles and parabas I'd rather be involved in than Micron at this point because things have lagged behind. Gold never called a bubble ever by the same people who think this is a bubble. So when gold was going up at a pace last year that is equivalent to what the semis are, when it's vol adjusted, not a, not a single sign. The market will no longer be dominated by human beings who get emotion anchored devaluation and comfort. AI agents every day will manage more. So when that happens, we are moving too fast. Right now, the demand side is too strong. And so, you know what we're going to end up with instead of recessions? We'll have crashes based on bottlenecks. We'll have crashes based on inflation spikes. That's what will happen. That is what has happened. Since 2020, we've had multiple 20% corrections, all during the AI phase. So once we came out of COVID and we printed all that money, just go through what happened in 2022, then go through what happened during the tariff year. Just continually look, we're getting crashes. They just don't last for seven years. Tai Kim, I was shocked when I saw this, but this just goes on again after just 30 minutes of using OpenClaw. Now, I wrote a paper this week where I talked about it. I got a lot of people reaching out. OpenClaw is the most amazing thing I've ever used. And I'm telling you, if a bubble person has used OpenClaw, raise your hand. It just doesn't make sense how you can't see how being able to communicate with something while you're on an airplane doing extensive work for you on your computer at home 24 hours a day. Token consumption is about to go exponential.

So, here's what we finished. This was GPUs. This was Nvidia. This was the building of the IQ stage. And during that, because it was so small, PMI stayed below 50 the entire time. The entire time of the IQ stage. We enter the agentic stage at the end of November. And when OpenClaw came, it was the end of January. That's how long ago, how short a time period we're talking. Um, that's when OpenClaw went viral. And I read more things where people loaded it uh up during that period. I was at an event speaking and that's when I got it too. This is what's needed for the agentic stage. You're talking about 15 to 50 times more. And this is how you see, as I go through this, the parabolic supporting evidence of this stage. We are in the first inning, guys. Remember, it was a bubble in October because we were never going to get the revenues. Now that we got the revenues, it's a bubble because the hockey sticks have turned into poles. What's coming after it? For all the people that are bubbleistas, we still have to do autos, phones, computers, humanoids, robotics, all of the upgrade of the war side. This is a global race with China and the US, as well as obsolescence for the hyperscalers. So, you're trying to handicap the likelihood that we're going to have a dot-com bubble. The money is coming from the people who have, from the companies who have the most money. They're betting on this, which is still 3 to 5 years away. We're in this stage for the next three years and we don't have enough compute. So you get back to what Jensen Huang put in. It's a $90 trillion AI upgrade. You want to really, really fade that. The same people faded this back in the 2010 period during QE. These companies were growing in the same way. This is no different than any bubble you've ever heard of. And I bring this up because this is where I do agree. There's a bubble. So, everyone that's sitting in passive investing, which is everything, the majority of money is now in passive investing, which means it is benchmarked. Now, again, this was 2019, and his argument was you go buy small caps. So, every time I hear this guy who makes, I don't know, $20 million a year writing a Substack just being bearish all the time. He's called every single bubble that hasn't happened for the last 15 years. But more importantly, the passive investing side, he said, "Buy small caps." You couldn't have been more wrong. I wrote this this week. I published it on Substack because I had a lot of people reach out that den subscribers, the benchmark arbitrage of the AI buildout. And this is what I believe is happening. If you are long the S&P 500 through passive investing, by definition, you are underweight Intel. You are underweight every single name that is going higher. So this is not just a gamma squeeze done by retail that jumps on because they see the earnings grow and the upgrades happening. Finally, this is a benchmark arbitrage where every mutual fund, every pension fund, everyone who has moved into passive investing, MSCI World being 70% the US, they are screwed. If they want to outperform the benchmark, which some of them, that's their job, they have to get long the AI names. So, it only just recently started. So, my whole thematic portfolio coincided in terms of this parabolic move when we got the agentic world. It just started, guys, in November. The AI agent world just started. So, again, I've shown this before. Remember when you talk about mania, panics, and crashes, you are literally talking about something that moved slowly. It was linear. It was human emotion driven. In this world of this massive force that is funded by the wealthiest companies in the world that are bigger than countries, along with a race between the two biggest countries for military dominance. Whether or not you believe in AGI or all that, that's not important. But the buildout is happening and the revenues associated with it are already going on. If you want to go listen to something this week, Greg Brockman from OpenAI gave an interview with, uh, Sequoia Partners. And again, OpenAI's business, very simply, acquire compute, build on top of it, and resell intelligence at a margin. His main point is that demand for intelligence is effectively unlimited. So just remember that the demand for intelligence, people looking to buy, companies looking to buy intelligence, I pay lots of money for the intelligence. It is far cheaper than the hundreds of employees that I have worked for me over the course of 30 years. This is a replacement. It is far cheaper. The margin for them, for me, is phenomenal. And I find cheap ways to use it all the time. OpenAI still does not have enough compute. His advice to startups is to lean into the tools. Now, by the way, the other funding for this buildout for the Morgan Stanley, the Goldman Sachs, the Eli Lillys, the Mercks, name any company you want, United Healthcare, any company you want, they need to have their own data centers as well. This demand for intelligence, this demand for this, every company needs to compete with them because if they don't, their margins aren't good enough. They won't get investments. So the people investing in a capitalist system force people to buy more AI. So again, the future belongs to the people who actively use the technology and keep pace with change. That goes for your kids as well. Again, if you're fading this, you are not helping them all. Even if you've made tons of money, you're not helping your kids by not preparing them for a world that is far different than the world you were used to with the Kindleberger book. Dario Modi this week, we plan for a world of 10 times growth per year. In the first quarter of this year, we saw 80 times. So this is a trillion-dollar company which, as I'll go through this, people are arguing will be the biggest company in the world within the next three years. They had demand. They were planning for 10 times growth per year. Instead, in the first quarter, they saw 80 times annualized growth per year. That's the reason why we had difficulties in compute. So what have they done? They're buying compute from Amazon, Amazon from Google, and in the last week, XAI, Elon Musk, they're getting whatever computers available. Oh, earnings. That's another good way to look at see if this is really a bubble. How in God's name, this is an unbelievable move in year-over-year earnings growth, 27.1%. The S&P is up seven year to date. Look back. Look how big this number is. Look how big every quarter has been. Now, the only quarter to compare this to are the ones coming out of recessions. That's it. This is coming out of co. This is after we reopen. This is not a reopening trade, guys. And if you think it's just tech, it's not just tech. Here's the earnings growth. These blue ones are the quarter. Here were the estimates as of March 31st, less than five weeks ago. Look at these things. Every single one of them. Every single one of them except for energy. Magically enough, revenues, the same story. Mike Wilson showed this again. If you're not looking on a sector basis, maybe it's just large cap. Nope. Median stock up. Small cap up. Huge numbers reacelerating at a pace. I mean, again, Warren Pis has shown this there. Ford estimates now up 25% year-over-year. So, it's not just the actual earnings year-over-year, it's the estimates going forward. That's how shocking the numbers were to analysts. 320 companies out of the S&P 500 reported earnings. Out of 320, the average earnings surprise has been 20 20% so far. Here it is again. Again, stuff that hasn't happened. This is the historical average of what happens to revisions as we start a year. Here are the profit margins. Here's semis. Total semiconductor sales grew 88% year-over-year in March. And semis have gone up in this quote unquote parabolic bubble the same as earnings. Uh, unlike the dot-com bubble, there's actually revenues. This will upset many people and of course it will. This is Anthropic's latest number. So again, last year right around here is when 4.5. So again, they were going at five billion, 7 billion, 9 billion, and then Opus 4.5 comes out and we jump to 14, jump to 19, jump to 24, jump to 30, and now another step higher. Unbelievable. At this pace, Joseph Janthropic will surpass Alphabet in revenue by mid-2028. Just think about that. A company that wasn't even close to Open AI a year ago. OpenAI's financial projections from the Wall Street Journal. Again, you just go through this the revenue stuff in terms of what's people's forecasting. So, if you don't believe in that revenue, well, the confirming numbers would be the demand for the cloud. And so, here's the backlog that we just got in the most recent earnings. $1.3 trillion to $1.4 trillion of a backlog. And again, this yellow line here, that's when the agentic world started. It started in November, guys. If you don't have OpenClaw, you haven't even joined the party yet. That's like not using Waze, not using it for three years. You'll have to use it eventually, and it's not coming anytime soon, as far as I can tell in any of the models. Um, Edardenni puts this, and I think it's important, and I use this for subscribers this week. I think you'll like what I built. The PEG ratio, so the, uh, ratio of the growth to or PE to growth, which is the forward PE divided by the long-term growth, is now down to 1.03. The market looks cheap unless earnings growth expectations for the rest of this is what he's calling this period get bashed. That's what happened in 2000. So again, you're forget the price. If you bet this isn't going to happen, you are betting that earnings are growth is going to collapse. Now, I've shown something like this before, I'll show it again. Here is the S&P 500 PE chart going back to the bubble. Here we were at the peak. I want you to see it's correlated with the, um, mesh consumer confidence level. I came back from Brazil. I remember how stupid this was. I remember how obvious it was. I was in drugs camp along with every other quote unquote professional. You had four-letter names that had no earnings. Never I just jokes of companies. They were popping up everywhere and all they needed was a website. And the S&P was up here and every person in the country was involved. Every person in the country. Here we are now. The S&P 500 is not anywhere close. It's the same PE. It's basically been since COVID when we printed all that money. And here's mesh consumer confidence. This what didn't include this week. This is lower now. Don't use the excuse that this is a polarizing survey. You guys are wrong. If everyone was making money right now, we wouldn't have a polarizing politics situation. This is a problem of the distribution of wealth. And remember before COVID, we were up here at the same time as PEs. The correlation only broke, honestly, right around here. It just continued to go down. So again, we're in a very different situation where affordability is a major issue in the country. The leading stock for the bubble, Cisco, back here, their PE was 130 at the peak. You can't see it over here. Nvidia, the lead dog here is the gray line. Here was Nvidia's PE back then. It was in the mid-60s. Their PE right now is the lowest of the last decade. They are the most important company in AI. This is not a bubble. These companies are making money. And the reason these PEs are low on Nvidia and on Micron and everything else is because the quote unquote professionals can't buy them. And I say they can't buy them. The majority of money at the hedge fund world cannot have a concentrated position in one of these names for a variety of reasons. You have to think about this in terms of what's gone on. Retail is playing a party right now with names that are trading. Micron is still has a six and change PE. I'm selling some of it because I've got the hangover of believing I've seen this before. Um, so I'm even doing the same thing. I'm just looking for other names. Goldman Sachs report going through. I'm not going to go through all the details, but tracking the trillions. And again, I'm bringing this out so you guys can go through and see the numbers from every single major firm. They were all saying that it was bubbleicious back in 2000. They are all saying there's nothing that is going to stop this. It is going to happen. What will stop it? In the stress case, delays become severe enough that investors start questioning whether AI revenues will rise fast enough to justify the capital. This is the reason why I am reducing my positions on the memory market. I think that particular market because it started in September of last year is further ahead than the optical market for Marll than some of the other places that I've talked about and written papers about in chemicals and empower. I believe we're at the part where the bottom end of the five-layer cake, the energy power thing is going to be a problem. I believe inflation is going to be a story for the second half of the year. So I think you start to have issues with the momentum trade. That's what I believe is going to happen. Here are the numbers. Again, you guys can read this on your own, but these are staggering amounts of numbers that are expected over the course of the next six years. And guess what? They're getting bigger every single year. The amount of CPUs, the amount, you guys can go through this on your own. It is gigantic what you need. Non-work agent workloads. Okay, this is where the trigger point was. This is when we get into consumer agents and it just grows continuously. This is the inference side, but you're also leaving out the enterprise agent side. It's just a dramatic amount of token use that's needed. Tokens are the food of these digital employees. Imagine if all of a sudden 8 billion people on the planet became 16 billion tomorrow. That's what's happening with digital employees and those digital employees eat the commodity that is tokens. Tokens are power plus chips. End of story. They are commodities. In fact, everyone who believes that oil is going to infinity but doesn't believe that semiconductors are going to infinity. Ask them the question why. We have a severe bottleneck in the same way the strait is shut down. Demand is severely above. In the case of oil, we are managing demand lower through the digital economy, through countries seeing the video game of the ships going through the Strait of Hormuz. You couldn't see that 15 years ago. Everyone sees how many ships are going through. So if you're a country that depends on oil, then you switch your your car plates on who can drive those days. You make it more difficult. You raise, you do whatever you need to do to kill demand in a manageable way. The same way when Silicon Valley Bank goes out of business, we immediately do something in that framework. We live in the digital economy where information is exchanged instantaneously. The 1970s, we didn't have a video game of the Strait of Hormuz. Goldman goes through this thing and talks about the compute intensity. It is insane how much we need. Morgan Stanley agrees. Black Rock, Tony Kim spoke at Milin. The AI cap inflection will continue. This is the new reality. Year-to-date, the compute and model layers have added 8 trillion in combined market cap while the service apps that make up two-thirds of today have lost 1.2. This is the benchmark arbitrage, guys. 8 trillion in combined market cap, while the service apps that make up two-thirds of GDP today. So, we're getting an unwind in things that make up two-thirds of GDP today. We're taking the small things. This is benchmark arbitrage. Tony Kim agrees with me. You guys need to make sure you're preparing for this because I'm telling you, this is the beginning of it. So, bubbles will last and they will tell you, well, I know, I don't know when it'll end, but I know it will end. And I believe that at some point here, AI is going to gobble up everything. It's a super supersonic tsunami. But our job is to make money today. So, if you want to sit there and say, "I'm not getting involved in this because the bubble's going to end at some point. I just don't know when." You're assuming two things. One, it does end sometime in the very near term. And number two, that it's going to go all the way back to a level you would buy. And what I think will happen is something goes from 100 to a 1000, it corrects back to 650. The people never buy it at 650 because they're waiting for it to go back to 100. That is the way this thing works. Larry Frink predicts birth of futures market for computing power. Again, what I said, if the if this already existed and we had charts of it, then it would make people think differently. This is the oil of going of the intelligence world. This is the oil of it. Power plus chips. That's why Jensen Wong said this is a $90 trillion change. The massive increases in AI related capex estimate will also pull in the S&P earnings. This is coming from Jim Chenos. Given, and again, he's just stating a fact, the accounting mismatch for revenues and profits. Immediate recognition and cost. This all fits in with the one big beautiful bill. They put in the bonus depreciation to allow this magic to happen and to incentivize the capital spending. I don't make the rules. I just watch the rules and play by them. That is the reality. So, will we have too much spending? Not relative to the demand, but we will have too much. Right now, we have too much demand for the physical infrastructure. And that's why I'm rotating out of semis and moving into the power side, which includes silver. I think we're entering into a new regime. I'll get into that. STRL, a must read for Sterling infrastructure, just to go through and see this. I'm not going to read this, but you guys should pause it here and just read through it. These companies are just starting to see the demand. It's spreading. You had the battery names. Fluence, which is part of my power basket. Go read their earnings call. It was a dead stock. It was down, I don't even know, 50, 60% year to date. Well, most of that was made back in the day. Go read the battery stuff. We're going to need tons of batteries. Every single part of the power trade is there. Now, if you want something negative, uh, Robin Wigglesworth, FT, someone I've got to know over the years, had a great article in terms of one of the places, and to be fair, he's not bearish. He's just writing the reality, which is true, which is you've got all this spending going on by the hyperscalers. You had this massive income move, which again, this boost will not happen in the next quarter. So don't be surprised if the 27% year drops down a little bit, if it's for no other reason just because we don't have this because a lot of this is related to the ins, the the interconnectedness of all of these companies. Uh, a lot of this was Google investing in Anthropic and it being marked up at whatever number it was marked up at. Now, if it keeps getting marked up, yeah. So, we talk about this as being some kind of, you know, everyone's dependent on everything, but just remember these companies bought hundreds of companies which are now Google. You're watching this on YouTube. Go to Instagram. Go to all of these places. Those would have been standalone companies. They were purchased. So for the week, here's this bubble that everyone's talking about where it was unchanged for six months and actually down over six months, as that I, I had highlighted and we came out of there like a racehorse. So yeah, we're up, but again, we didn't have a huge year in the S&P last year. We're not having a huge year so far this year. Uh, Qs, which were down here because of the hyperscaler and the semi stuff, they've flown up. You know what hasn't flown up? Oh yeah, all the place that people wanted to go buy. So, here's IGV relative to NDX. When anything positive happens in IGV right now, see, I told you DataDog was up 40%. Guys, it's not worth your time. And if you take out the Bitcoin miners out of this, which I'll show later, we'd be at new lows. IWM not going as fast here. Um, I, I'll get into a little bit here. The breadth of the market is really becoming more of an issue. Um, that is because of oil. That is because of what will be food prices. And I do think that that becomes part of the midterms. And I think as the inflation thing goes higher, that's why I think the market will start to become a little dicey in the things that are leading my thematic portfolio outperforming all of them. Again, from the March lows, you're talking about a 30-some odd percent rally. Uh, again, a ton of them in there. Now, if you're a macro person, just like oil's been unchanged since the day of the bombing, effectively. It's traded in a range, but every time I look, we finish a week somewhere around 95 to 100. Uh, here's 10-year rates. Again, we're the same price we were in 2022 when ChatGPT started. Yes, we are at the same yield. Now, we have no rate hikes or cuts in the market. The move index all the way back down, which means as bad as private credit is, spreads aren't widening. Mortgage spreads aren't going crazy. There's no V in the in in the rates market. That's going to have to change if you're going to get anything in the equity market. Um, RBC lifts S&P target to 7,900 on two-speed economy view. It is. We're in a very bifurcated market right now. The distribution of wealth issue, the winners and losers are showing up again. And here's a couple charts to show it. So I believe that small caps would outperform large caps because that's what's happened every time we've seen the PMI go higher. And that's what we got with equal weight S&P relative to cap weight that collapsed right back down. Um, this divergence here to the PMIs is telling you something. And again, what it's telling me at this point is that there's a lot of losers on the this all started with Iran. So again, I think one of the things that people have to realize there's a lot of companies based on that mania, panics, and crashes book. And all of those companies, the Fords, I'm going to take you through some of them. Anything that's not AI, the past is going through what it should go through. And that's been happening. We have rolling recessions, but the market cap in those is so tiny that they just don't matter. Here's credit spreads relative to that. So, we broke this exactly at ChatGPT. That relationship has broken down. And that's because we don't have any companies taking any debt that matter. The companies that are taking debt have better balance sheets than the United States of America. Consumer PC laptop market collapse worse than 2008 financial crisis. And the reason is because AI is moving the cost of all of that stuff higher. Whirlpool says appliance demand hasn't been this low since the great financial crisis. So now you have PCs, phones, autos, take what you want. Appliances, housing. That's what the Kindleberger was book was about. It wasn't about digital employees replacing humans. Think about what happens. We don't have that. And the money being managed now is by people that don't have emotions and their one goal is to make money. It's not to be right. Everyone saying there's a bubble is trying to be right. They're not trying to make money. Today will be the second consecutive day where the S&P closes at a record high with more than 4% of stocks down. The last time since 1929. We are getting all kinds of breadth signals which are bad. The problem is there's such a small waiting in this at this point that we'll see what happens. 47 stocks in the are currently at or within 2% of 52-week highs. 31 of them are AI sensitive industry groups, roughly 2/3. So again, uh, interesting thing in the payroll numbers. So two things. One, we've created two back-to-back situations at more than 100. If we keep getting 100,000 and we've now accepted that 0 to 30 should be the number, you're going to start to see some wage inflation. You get wage inflation along with the commodity inflation, that's going to be a problem for the Fed. Also, remember, it's going to be very difficult for the Fed to not turn hawkish. If we're getting these, I don't think they're going to raise rates because Kevin Worsh is taking over. But if you have inflation going higher and you're creating jobs, and the reason this print is important is because unlike every other time during this where all of job creation was basically isolated to healthcare and professionals, here are the ones you should look at for the AI knowledge work disruption: information, jobs, and financial activities. They're negative again. They've been negative. AI is having an impact here. You know what's amazing is two months in a row now we've created lots of jobs in trade, transportation, and utilities, mining, construction, everything up there, manufacturing. That top end is starting to show positive numbers. It's never going to drive this number very high because we don't need a lot of these. But the reality is, if this is growing 50,000 a month and these start growing as opposed to being negative 40 a month, they're growing at 30 a month, then all of a sudden you have a 60 to 70 shift, you'll start doing a hundred a month. Not saying it's going to happen, but I'm saying in the non-AI related job side, we're actually starting to see creation, which would be more of an inflation thing. That is why I believe we're going into a regime shift. Everyone who writes me and says you're wrong on transportation. I have no idea what you are doing and where this bias comes from. The March logistics managers index reads in at 69.9, the fastest level expansion since March '22, reading 76.2 as logistics movements are now knocking on the door of 70. Transportation prices continue on their sharp upward trajectory. As mentioned above, the biggest movements this month come from transportation metrics. Capacity was the biggest mover dropping. There's no capacity. There is an extreme rate of contraction in the second load in reading in the history of this metric, ahead only by 23.8 from September 2020. So we're at a point where the only time we've seen strength like this where you take the need versus the capacity is in 2018 during the tax cuts and 2020 coming out of COVID, which means the one big beautiful bill and all of the AI spending is causing it. This just started, guys. Here are flatbed spot rates. I heard people tell me this isn't real. You're full of it. The ISM still hasn't gone up to 60. I believe it is heading up to 60. Remember, we just came out of the longest period of the PMI being below 50. So, this right here is the 20-month moving average. Again, we've been below since coming out of it in the great financial crisis, the longest period in history. This will not be resolved quickly. Have your PMI trades on and make them all related to AI. And if you don't believe me, John Rog from 22V, uh, one of the best technical people out there to look for long-term trends. Big baseball fan he is. He has releases each week right now a frozen rope, a chart that he loves. Started in early first week of January. These are the ones that he's saying. And again, a frozen rope for him is something that has a very long base and is about to break out and the chart looks like it's going to be a frozen rope, meaning it's going to go up and it's not going to look exactly like a parabola, but he's kind of saying these are great risk-reward type scenarios. So, I just went in and said, "Okay, what type of regime AI is this likely when we just take all of his names? Power, copper, grid, equipment, utilities, natural gas, transportation, capital goods, agriculture, food inflation, higher long-term yields, blah blah blah. It's a PMI sensitive thing. It's an AI sensitive thing. John's just picking charts on that he likes. The beauty of what I'm doing here is I'm giving you data on things that have nothing to do. I'm shaping my views based on the facts that are happening in the market. A bubble is not a fact, guys. It is not. It's a gut instinct based on the Kindleberger book. It's based on Druck. It's based on things. It's like you guys being scared of having Jägermeister because you remember those horrible shots from college. There are plenty of memories you have. AI agents don't have those memories. Retail risktakers, they're in this to make money. They're trying to make money. The people trying to make money are trading the bubble. The people who are smarter than the markets are calling it a bubble. More stuff on this. Power shortages. This is the power demand thing. Goldman put out a big report on this in terms of the data center growth. Again, it matches up with what we're seeing from the compute needs and you're going to start using more even if it's just Anthropic using up all excess capacity. That's why they're going to Amazon. That's why they're going to Google. That's why they're going to Colossus. That electricity will be needed now because there's compute that wasn't being used. Well, now it's going to be used. So, it's going faster. They're not using it as fast. It's going faster. Grid under pressure. AI demand forces redesign. Guggenheim Schwarz warns power crunch imperils US and AI race. Goldman Sachs on how AI is making your life more expensive. Again, it's doing it on every single thing. It's doing it on the electronic side. It's doing it on the electricity side. It's doing it on smartphones, on computer prices. Software is going higher for the bolt-on AI. AI prices are going higher. Here is the second half of the year reality for food prices. This is a 25-year chart of gas at the pump. That's the yellow line. This is where we currently are at 456. And this is the BCOM A index, the white line. It takes a little while for this to catch up. And the reason is because the fertilizer prices just went higher. Chevron CEO says global oil shortages are starting. Prices could go even higher. Jeff Curry reminding people oil oil storage tanks in the US will run empty. So, there's a difference, um, in listening to the doomers from oil. We have a problem in oil. I show it every single week. We still have no ships going through the strait. It just won't end overnight. And prices will stay higher for longer and there will be rebuilds. Even if we reopen it, countries just learned a lesson. Whatever inventories they had before, you don't think they're going to fill those up and more. They'll be a bit under oil for a long time. Uh, just a reminder that China and the US are getting together. Uh, I think at this point no one's worried about this. I can't imagine it ending with some grand bargain at this place. So I don't know what's going to happen in terms of come out and maybe it's a a positive. But again, any delays or any issues at this point, you're looking for anything that could slow things down. I'm not too concerned about it at this point, but I, I, I definitely think it's something to keep on your radar. I'm back to the capex thing just to remind you that we're going for this and Renmac socks has hit our bubble watch threshold. So bubble watch, um, in their mind, just highlighting again, they're doing it purely technical. I care more about that than people saying there's a bubble. Um, I care more about this DRAM is the ninth most traded ETF. It traded over 1 billion each in the past two days. Absolutely unheard of. This is these are the reasons why I'm reducing my my Micron significantly. Because I do believe in bubbles, parabas, and speed crashes. When AI agents dominate market forces, remember, I completely subscribe to this. The difference is it's a speed crash. We go faster up, we go faster down, and it stays that way for the next decade. So, you either adjust to this and get this book in 10 years or you get the advanced copy right now and you read that this is the world we're in, guys. The mania, panics, and crashes was a world for professionals. It's not for one for traders. The $90 trillion AI physical upgrade cycle. This is one of the things that I wanted to highlight to subscribers. I'm building a re, a rebalancing thing. So, I've done so many things in the past two weeks for the subscribers re, re, related to the thematic portfolio to give you guys ways to be able to trade it. We're in the bubbles, parabas, and speed crashes. You need information real-time. This is the way I'm incorporating it into a rebalancing for people who are looking at it as more of a model portfolio where I will be changing the weights. The stuff I'm giving you guys the names for the thematic portfolio, but what I'll be rolling out for the top-end subscribers is something more fixated for them to be able to rotate the portfolio. Less about trading, more about thinking of like a reweing with inside a portfolio, a rebalancing that happens using early cycle, mid-cycle, late cycle. I believe right now we are entering into more of a late cycle situation. Late cycles always involve bottlenecks. They always involve inflation. Here's the rack. I wrote this report basically right in here. This was after an early March. This was before the rally. Uh, and that's because it coincided with the Morgan Stanley, uh, event, technology event that they had and you had Lisa, uh, Sue who spoke from AMD. You had Intel speak. If you would have just followed my report there, both those names are in that, uh, you would have caught it. Here is Soyc. Know when I went through it at the beginning of the year. At the beginning of the year, after Nvidia bought Garac, that they were going to benefit dramatically. That was in December. I wrote that paper. This is a French company. Uh, most of the people that were looking for names, they were looking for lagards. This was a lagard. Once it broke through this moving average, which is now turning up, you got this rally. We're still not above the 2021 highs. This name has gone up five-fold in three months. It's part of the advanced packaging one. I get back to the PEG ratio. Edard Denny triggered something and I thought this was a, a good way to give you guys something, uh, on the valuation side. So basically I want you to build me a specialized output I can run every week with fundamentals with my thematic model portfolio attached is the portfolio. I want the columns to basically go through and give me PEG ratios. So you will see on the website hopefully this weekend if not Monday. Chill out, guys. If something's not up there.

will be up there. If I'm showing it here, it will be up there. What I did is take all of the names and basically go through and do peg ratios for them. And I just want to highlight right off the bat.

So earnings growth for Kamores expected to be 60% based on analysts. And remember these are the numbers and we're beating numbers constantly. This is the forward PE. So the PEG ratio, this number divided by this number gets you to 0.2. Very low peg ratios.

Now I want to show you high peg ratios. Oh, this is the benchmark arbitrage. So you're long Microsoft, you're long Amazon. Microsoft has collapsed. Look at it. It still has a 1.4 peg. Amazon 1.66. Meta 1.96. Apple three. Alphabet almost five. So you're telling me these names are expensive in my thematic portfolio?

Here we go. Here are how many names? 30 of the 95. I took out the five that are in the the the macro satellites. 30 of the 95. So about a third are less than one. Less than the hyperscalers, more than half. So again, 1.03 is where uh Edardenni talked about and that's a long-term growth rate. Again, you've got plenty of these. The thematic stuff, it's not fundamentally expensive.

So go through the list for the technical sheet. Remember I give you a technical recap. Forget the scoring guys. Don't follow this blindly. I put together an algorithm so you guys can have a spreadsheet. What you should be doing is knowing that you have this data. I I I check it as best that I can in terms of random numbers just to make sure. But there's a a possibility that some of the numbers are wrong. Don't treat this as investment advice. Don't treat it as I should go buy this because he's got a 100 score on this. This is just to show you the strength of the trend based on these things. If you want to know what each of the columns is, go back to the trend score thing and you'll get to see it. But I give that every week. And this sheet to me is the most important because you can look what percentage of them are above the 50-day. What percent are above the 200 day? If you want to go play for mean reversion, then I would look further down here. What's the average RSI? Okay, you get to see the ones. What's the score? Strong, strong, strong. These are constructive.

But I also added something new. This is a creation that I'm very proud of. So I wanted to put some exhaustion things in there. So um I do believe I'm an Elliot Wave uh technician. Uh that's what I look at. It's very hard to bring Elliot wave to this because I'd have to go through every one and I would never use AI for it because I do believe it's very difficult. Although I'm trying to do that as well. But for extreme exhaustion, if you guys are looking to see RSIs above uh 14-day RSIs, 5day RSIs, you guys can go through a list. It includes some of the demarc stuff and then I just take an aggregate number for exhaustion. So you can see which ones are the most stretched on an exhaustion and highly likely. So look at these. All of these right now are in the very very red zone of exhaustion. The Intel, the Micron, part of the reason I sold the Micron. Um exhaustion to me means we could be having a speed crash in these. Not saying it's going to happen, but if you're a trader, it's the exhaustion thing. It gives you every name on that.

So then what I did is say and this is what I would do if you guys you have access to these files. Go through these three Excel files. They rank a 100 name portfolio based on technical strength, fundamental valuation seen through peg ratios and exhaustion. Give me a ranking of the top 10 based on finding names in here that are trending well not yet exhausted blah blah blah. So when you go through this these are this thing is really smart. In fact I want to read you something. I have three the three files loaded match cleanly by ticker across 100 names. treating good PEG as a within theme ranking because a semiconductor peg and a utility energy peg should not be compared. This is high IQ and something that again I don't know how many people if you just hand them three spreadsheets would be able to do that. This thing has 140 IQ right now guys. You're going to get phenomenal answers with the top one and this is the top 10 ranking or at least I showed you the top four. I can't give everyone the where it is but it goes through. Look, peg ratios, the technical score, composite, theme rake, blah blah, like go through it on your own, figure it out if you guys haven't gone there yet. And again, where you're going to find all this information is in the thematic research and ideas, okay? It's going to be the weekly technical sheet, the weekly fundamental sheet, or weekly PEG ratio sheet, and the weekly exhaustion sheet. And again, for those of you who haven't subscribed yet, again, I don't know what you're waiting for. AI22vresearch.com. You guys can go see the information, do it on your own.

This is the performance. This is the S&P at up 8% and this is each of the baskets. And again, you got power, you got the whole rack, which again is going to become more important uh because of the enterprise buildout. The chemicals, which I think are replacing oil as the commodity of the future aside from semiconductors because you need chemicals to go into semiconductors. You got the optical fiber side in the package. These is this is all the agentic stuff. So the things I'm giving you, the reason they've worked so well is because I created things purely based on the agentic side. Every other thematic basket I see gets into they break them down into certain things for the portfolio waiting.

Just to give you guys a teaser on this and to show you how much thought I'm putting into it. The AI regime I showed you the circle I have to identify. I think we're in the late cycle. I think this is the bottleneck side that we're entering into. Then I go into theme first and go through each of the themes to level out the weight, the peg ratio to get make sure I'm getting names that are logically in there from a fundamental basis. There's a two-stage optimization process that I'm working on. One at the theme level and then one at the uh portfolio level. And also something I've always wanted to do which is to show subscribers and especially the people that are now starting to uh invest in this uh via swaps is to make sure that you get a sense as to if you wanted to optimize this particular portfolio what would the ups and downs be of every single name. That is something to that I basically uh have always said optimization when you're running something your your job in bubbles parabas and speed crashes is to rewe into something your your job is to minimize draw downs not to go into cash. So again if you're in a parabola in a bubble and things just keep getting away from you if you believe in the 10-year cycle and that any correction that happens will be months not years then what you want to make sure is that you're never ever ever stopping. you just want to slow down like you're driving a car and then speed up again. Optimization will do that and then there's the cycle map which goes through earning surprises and things like that. So that's everything I'm working on.

Um a few more things in terms of what has happened and places for you to look. Hanhai came out and I think this is important because a lot of you uh have asked me about Vistra. These are names which haven't moved now for a while. Hanhai was one of them. And when I say haven't moved, all four of these names, Nvidia, Vistra, Eaton, and Hanhai. To me, they fit into the GPU data center trade. They all did well from Chat GPT. And then they consolidated for a period of two years. I think the GPU trade now is a lower beta one, meaning the data center buildout. These are all names associated with it. So, Hunh High coming out. I sold out of Micron and part of what I bought was Nvidia this week. I'm looking at Vistra. You'll probably see me buy that. And for those of you in the in the uh space there for it have been frustrated. I hear you all the time. IPs the same thing. If I'm right, I'm going into the energy side. The IPs, it's the bottleneck side, guys. And eaten fits in with that as well.

Um ABB electrification. I just wanted to show you how I can go from an interesting data point from semi analysis on their stuff. take this image, bring it into here, create a visual on it, break it down, give me all the names associated with the different components, and basically then go look and realize how many of the names on this list created from AI or in my model portfolio list related to this acceleration that is happening. 12 of the 21 names. This is the way I make sure that I'm covered in the electrical stack visual that I just saw. Here's the place where I put most of the money that I got from Micron. So again, I'm not going to cash. I'm moving into rotating into something that I think is lagging behind.

This is silver relative to gold, the white line overlaid with micron going back since 2024. So this has gone parabolic. We're still sitting here on silver verse gold. And here is LME metals versus gold versus silver. So the metals are breaking out. You have silver here. And I want to make sure people know that China has increased their purchases of gold significantly in the most recent month compared to when silver peaked. So I believe we're entering now an inflation stage. And if you didn't believe me, CPI print, this is the current forecast for this week on I believe that's Tuesday 6, which would take us up to 3.7. And the reason that is important is because that will move three-month bills below the CPI for the first time guys since the inflation error back here. And remember I've shown this before this line here this is when Bitcoin started. We are going back into negative yields. I believe Bitcoin will start to become something along with silver along with gold.

Now for those of you out there who keep reaching out asking how you can help me. I am starting now. I was building a dashboard this week on on crypto. This is the original one. I am going to start doing a video, another video a week sometime before the end of the year. I'm working on it now, but to do that, it needs to be predominantly crypto translated back into macro and AI. So, where this video is mainly the AI connection to macro, this is going to be the crypto uh connection back. And the reason is guys because we are entering the most important stage and I've said it before, AI agents are the most important part of crypto. If you don't believe me, the end of human trading, Raul Pal and Yonius Assia, great interview. Highly recommend it. Um, if you haven't thought about this bubbles, parabas, go read this. We're going into the velocity of money, guys. You're already seeing it. You see it with Kshi. All of this stuff aligns. Crypto aligns. AI agents and crypto collide by moving finance from human speed to machine speed. Agents can trade, allocate, hedge, and shift capital. This is already going on. This is why you need to listen to it. will be going into wallets, exchanges. The reason this is important and the reason you need to listen to this is because what's coming now tokenization when ownership becomes programmable. This is what we're entering into the AI agents connect with crypto over the summertime. I'm going to be down in Fort Lauderdale for May 13th to May for uh I believe the 15th. I will be speaking about tokenization at the II event. This is my third III event this year. I've done endowments and foundations and I've done pension funds and now I'm going to do whoever comes into this one. This will be mainly about again AI macro what I do here but going into this part the tokenized asset rollout scheduled for July 26th. I don't think people have thought hard about tokenization yet. I think you need to. Another person you can listen to on that front who I recently had a conversation with, Bill Barhide. I think uh Abra and all of these companies that are thinking about this, I think you guys need to start having them into your office, particularly the RAAS are the ones that I'm most worried about because this is going to be a big big deal. Wall Street clearing giant enlist 50 firms for tokenization launch. Everything's getting prepared. Thinking about tokenization, real world assets, and stable coins in a more cryptonative way. We've seen strong interest from banks, fintexs, and asset managers to bring US equities, commodities, indices, and other traditional assets online. This is from A16Z. So this they wrote about in December 11th. You should go read it. A16Z is not some place to minimize.

Final few charts here. I know Bitcoin is grinding. It's not sexy. It's only up 33% since the lows uh recent lows, but I just want to highlight what has happened with the Bitcoin ETFs. We have made new highs in outstanding shares. If you were worried how the wealth managers were going to do putting money into Bitcoin, this is the Black Rockck ETF. Forget the fact that there's competition war. Morgan Stanley issued a very successful one. You've got Goldman issuing thing. Everyone's now involved. The move from money managers. The boomers are allocating to it. This is going to accelerate at the end of the year, guys. The end of this year is when people have to rewe in this crappy software. The benchmark arbitrage again is impacted. The reason you watch this, Bitcoin will be a growing part of everyone's portfolio over the course of the next decade. Here's Bitcoin relative to the eyesshares. Outstanding.

So, my IPO story still sits here. OG sold it down. Hedge funds sold it down. People hedging growth assets sold it down. Well, get ready to be buying some. Here's something I created this week. Um, because I'm looking for all things. The blue line here is an advanced decline of just closing above the opening versus uh the close higher than the opening. So what I wanted is any day where the close above the opening is a plus one. Anything that closes below the opening is a minus one. And here's what we got. Lagging behind but hanging in there and trending higher slowly. Uh I love looking at these. You guys have seen these before. I believe there's always catch-ups here. The red line here is the Morgan Stanley Bitcoin miner ETF. The white line here is the JP Morgan crypto ETF, which includes things like Coinbase and the miners. The yellow line here is the Schwab crypto index. All three of these way above where they were here, and associate prices of Bitcoin 90 to 120. And here's Bitcoin and here's Ethereum. Bitcoin and Ethereum were the other two places outside of silver and Nvidia that I put money into this week as a replacement for Micron. Here is the chart on the Schwab one. Looks like a breakout is close. And here is the miners which remember are part of the IGF. So they've been dragging the IGF along with some of the names on the model portfolio. Look where I recommended Cadence Design Systems. Look where I recommended Synopsis. Look, when I did the video on Oracle and go look when that was, which was right here. We've moved higher, but a lot of the SAS names are still down here and lower. You've got the pure AI names in.

That's it for this week, guys. The longer one, uh, I'm here to help. Hit the subscribe button, forward it to family, forward it to friends. If you're an RAIA, family office, whatever, reach out. Uh, pension fund, mutual fund, whatever it is, reach out to Jordy. Um, Jordy at visser-labs.com. You guys can find me there.