The Smart Money Thinks This Could Become A HISTORIC BULL RUN

0:00Ladies and gentlemen, the stock market keeps hitting new all-time highs and it's awesome, baby. Now, the stock market is hitting all-time highs because AI has become a no-brainer trait. There are millions of investors around the world pouring their capital into this trait. But the recent rebound in public equities is being driven by only five companies, according to a recent Financial Times article. Now, these five stocks, Alphabet, NVIDIA, Amazon, Broadcom, and Apple, they've accounted for half of the S &P 500's growth since the month of April. These are behemoth companies. They're worth trillions of dollars, yet they're still growing double-digit percentages over just the last six months.

0:34It's frankly quite impressive to see such dominance from some of America's largest companies. Now, these eye-popping gains are not just happening in the public market either, though. Binance Research, they recently wrote that there are three separate trillion-dollar IPOs that are expected to launch this year. Now, historically, there's only been one trillion-dollar IPO ever. That was Saudi Aramco's 2019 listing at a$1.7 trillion valuation. Now, Binance research shows that SpaceX, Anthropic, and OpenAI, they have all appreciated by an average of 88 % in the secondary market in 2026. And people are using these pre-IPO per futures to actually get exposure to these companies.

1:13And that's why you're seeing such massive gains. So what are investors doing if the companies in the public and private market are growing this quickly? Well, Paul Tudor Jones, one of the greatest traders of our lifetime, he was recently on CNBC and he put it about as bluntly as you could. He laughingly said, well, I bought more AI stocks. Just take a listen to this. I want to know you got back from this conference and I want to know short term, long term what you decided to do. I bought more AI stocks. You did. Absolutely. And what would you say you bought more AI stocks? Was that the big hyperscalers?

1:48Was that the semiconductor chips? So, again, I'm a macro trader, so I just buy baskets. And what I would simply say is it's a crazy, crazy time. If I had to pick, you know I love always to find historical precedents. You can kind of look at the productivity miracle around the introduction of the PC, 81, 82, really 81, 77. See, I would kind of say 1977 when Apple dropped theirs was kind of like ChatGBT, but it wasn't until Microsoft brought their PC in 81 when you got widespread commercial adoption. So ChatGBT in 22, I kind of think Claude Code January of this year would be the equivalent of when Microsoft came out in 81.

2:39And then 95, we kind of look at when we finally allowed the Internet to be used for commercial purposes. I think that was May of 95. And then Windows 95 came a few months later. Those were both the beginning of productivity miracles. Now, it's not every day that one of the goats is on television enthusiastically laying out his investment thesis like that. But there's an immense amount of data suggesting the AI bull market is just beginning. Everyone who's worried about a top, they're wrong. You can look no further than the leaders of the technology explicitly saying that there's too much demand and not enough supply.

3:16For example, Anthropic CEO Dario Omodai, he recently revealed at a conference that his company had a contingency plan that they could grow 1x all the way up to 10x this year. But instead, their products grew 80x. They didn't plan for that. Here's Dario explaining why that's so important in his own words. In the first quarter of this year, we saw, if you were to annualize it, 80x growth per year in revenue and usage. And so that is the reason we have had difficulties with compute. We've planned for anything from it only grows a little to it grows 10x, and yet we saw 80x. and so as you saw today with the SpaceX compute deal we're working as quickly as possible to provide more compute than we have in the past.

4:11We'll continue to do so we'll pass that compute on to you as soon as we can do so I guess I hope the ADX growth doesn't continue because that's just crazy and it's too hard to handle I hope for some more normal more normal numbers, a mere 10x. But we will manage it absolutely as best we can. And we're every day trying to obtain even more compute that we can pass on to you. We're sorry if sometimes it takes some time, but we're going to keep going to acquire as much as we can. Now, the big takeaway for me from this video clip is Dario's focus on finding more computing power. He says that that will allow him to service the intense demand from his customers.

5:03Given that background context, it makes sense. Anthropic recently partnered with SpaceX so that the model lab can now leverage all of the massive computing infrastructure that Elon Musk has been building. But it's not just the model labs. BlackRock's Larry Fink, he strongly agrees that the significant demand for compute, he actually thinks that there's so much demand that a new asset class is going to be created that is centered around buying and selling compute futures. Take a listen to this. The United States is short power. We're short compute. We're short chips. And there are going to be shortages in all three and memory for things.

5:41I actually believe a new asset class will be buying futures of compute. We just don't have enough compute power right now. Now, this brings us to the question of why so many people seem to be interested in artificial intelligence. Do they just think that they can get rich quickly or something? I don't think so. The simple answer would be that intelligence is in high demand. It always has been. Think about it. Companies have scoured the world for years to find the smartest people to help them succeed. But if there's now synthetic superhuman intelligence available to these same companies, what do you think they're going to do?

6:14They're going to pay ungodly amounts of money to get access to that superhuman intelligence. But we're also starting and get data that AI is being used across the economy to create GDP growth and accelerate job creation as well. That's how technology has always worked. Alvin Fu recently shared this chart right here. This shows that technology usually creates jobs that didn't previously exist. And that's what you want to see in innovation. So again, this is a big reason why there's persistent, insatiable demand for artificial intelligence. If there's a shortage of data centers, power generation sites, available chips, and a variety of commodities, investors are going to allocate their capital to the imbalance because they want to capture the economic reward.

6:56That capital will help fund the accelerated buildout necessary to satisfy the AI demand. And that's exactly how the free market capitalist system we live in is supposed to work. But right now, if we go back, there are only five mega stocks that are driving most of the returns in the S &P 500. Those five stocks are further increasing the odds that the American Stock index is going to post a fourth straight year of double-digit returns. Given that positive performance, 42Macro's Darius Dale explained to Bloomberg TV, he thinks the biggest mistake the Fed can make this year is doing anything. Take a listen right here as his views revolve around the productivity gains that are brought by AI.

7:34The biggest mistake the Fed can make this year is doing anything. This is an economy that has accelerating inflation. When you look at the inflation components that they care about, this economy that is accelerating bank credit growth. At the same time, we have a productivity boom, and in our view, we think we're heading into a jobless recovery. So the push-pull dynamic there should say the Fed should stay on hold. I think the markets would probably not like the Fed doing anything in any one direction because it would create tension on the other side of the mandate. It's not totally unrelated, though.

8:01The whole point is when you have such robust growth, to John's point, the strongest, as you were saying, since 2021, and then you have a Fed with an easing bias, how much does that increase the risk of an inflationary kind of impulse that creates a headwind that people aren't really pricing in? Yeah, well, I think we're already seeing the inflationary impulse. If you look at, for instance, core PC inflation on a three-month annualized basis, we're at 4.4%. Super core PC inflation, we're at 4.5%. So we already have the inflationary impulse. And so the best thing the Fed can do right now is to jawbone that away to the extent possible.

8:32In our view, we think it's going to go away because if you look at the relationship between productivity growth, We think we're in a 150 to 200 basis point acceleration and trend productivity growth. That should knock off about 40 to 50 basis points from trend inflation, while at the same time you have some very depressing components in the labor market that are weighing on wage inflation from a cyclical and structural standpoint. The real inflation dynamic in the economy when we get past this inflation shock should be much lower in our opinion. I don't disagree with Darius right there. I think that AI is going to bring a lot of productivity and the Fed's in kind of a weird spot.

9:03But then we got the jobs report this morning and Navy Federal's chief economist Heather Long explained the U.S. economy added a strong 115 ,000 jobs in April and March's jobs were revised higher to 185 ,000. The unemployment rate stayed at 4.3 percent and hiring has been strong in health care. It's about a third of all job gains in April. And also it's been strong in retail, transportation and warehouse. So the stock market is surging higher. There's unlimited demand for compute and AI. Job creation is back. And the U.S. economy is pushing higher productivity output. We could always be better.

9:37The economy could always be stronger. People could be in a better position. But right now, it's very hard to argue that we're not in a big bull market. Equity investors are going to do well through the end of the year, in my opinion. So don't overthink this situation. Just grab your favorite stocks, put on your seatbelt, and get ready for the ride of a lifetime. That's it for today's show. Thank you guys so much for watching. Please remember to subscribe on YouTube. My goal is to get to 1 million subscribers. and if you subscribe today, that'll help us get closer to that goal and I'll see all of you live from the desk of Anthony Pompliano on Monday.