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Final call for tonight’s convergence summit… No surprises from PCE inflation… Ceasefire extension… Why bears continue to misfire… A tale of two ratings with Micron… Follow the money, not the mood
Before we dive in, a reminder about tonight…
At 8pm EST, Jonathan Rose and Mark Chaikin will be broadcasting live at their home Peak convergence.
If you missed our ass Summaries Details of what’s going on, here’s the short version…
These two trading experts have spent the past few months combining two of the most powerful “smart money” indicators into one “convergence catalyst.”
The Jonathan indicator tracks concentrated, high-conviction positions that appear in the market before a big move. Mark tracks the flow of institutional money – where big players actually move capital in real time.
This combined catalyst, tested across nearly 200 real trading trades, produced an 81% win rate and an average profit of 147% – and two out of every three losing trades were liquidated.
This outperformance makes sense when you understand more about Jonathan and Mark…
During the 2008 financial crisis – when most investors were watching their portfolios cut in half – Jonathan made more than $6 million in the markets.
At the same time, Mark created the Money Flow Index that is now embedded in each of them Bloomberg Station on this planet. He also built research tools for legendary traders Paul Tudor Jones and George Soros.
Tonight, for the first time, they’re bringing this bundled experience to you live — for free, starting at 8 PM ET. Just click here to register and we’ll see you this evening.
A quick tour through the headlines
The Fed’s preferred measure of inflation was released this morning, and markets got what they were hoping for — or at least, what they needed to avoid panic.
The personal consumption expenditures (PCE) price index rose 0.4% in April on a monthly basis, bringing the 12-month rate to 3.8%. Both numbers match economists’ expectations. More importantly, the core personal consumption expenditures index — which excludes volatile food and energy prices — rose just 0.2% during the month, below estimates of 0.3%. The annual base rate remained at 3.3%, which is in line with expectations.
This weak monthly reading supports hope that the explosion in inflation seen in March was a one-month rise rather than a new acceleration – which is exactly what nervous investors want to see.
However, the bigger picture has not changed. Annual inflation remains close to double the Fed’s 2% target. Consumer spending in April was supported by savings withdrawals – the personal saving rate fell to 2.6%, the lowest level since June 2022. Therefore, price pressures remain a major issue.
Meanwhile, oil prices are falling, erasing their previous gains, after news that American and Iranian negotiators will extend the current ceasefire.
here Axios:
US and Iranian negotiators have reached an agreement on a 60-day memorandum of understanding to extend the ceasefire and begin negotiations on Iran’s nuclear program, but President Trump has not yet given his final approval… and Iran has not confirmed its acceptance, either.
However, the markets are optimistic.
As I write this article, the Dow Jones has just returned to breakeven, while the Nasdaq is close to rising 1% – a split that tells you precisely where the money is flowing.
Speaking of money flow…
If you want to understand why the bears keep calling for a crash – and why the numbers keep proving them wrong – follow the money.
Start with what Nvidia company (NVDA) CEO Jensen Huang said during his company’s latest earnings call last week:
Capex is $1 trillion, and it is growing towards the three to four ($1 trillion) mark.
He was just referring to spending from expanders like Alphabet Company (Google) and Amazon.com Inc. (Amzn)which excludes new clouds and other segments of the supercomputing market entirely.
Nvidia CFO Colette Kress was more specific about the tsunami of capital expenditures on the way:
With analysts now forecasting massive capital expenditures to exceed $1 trillion in 2027 and AI starting to spread across all industries, spending on AI infrastructure is on track to reach $3 trillion to $4 trillion annually by the end of this decade.
How advanced is that consensus?
Analysis by Needham analyst Laura Martin shows Wall Street is currently modeling excessive capital expenditures of $1.03 trillion in 2028 — a fraction of what Hwang expects just two years away.
This gap is important.
The bears want to think that the market is dangerously overextended – and if we use backwards valuation metrics, they are right. But if Hwang is right – he is focused on the future – then this fear of overvaluation is exaggerated and perhaps completely wrong.
So, as you will see, when Andrew Ross Sorkin appears on television warning of an accident, it is important to analyze the question “Why?” Behind his humility.
“We’re going to get into an accident.” -And other useless comments that tell you nothing
Sunday, CBS Rebroadcast 60 minutes An interview conducted last October with financial journalist Andrew Ross Sorkin. He was promoting his new book about the crash of 1929, and warning that today’s market mimics that era.
From Sorkin:
I can assure you, unfortunately, I wish I hadn’t said this, we would have had an accident.
Naturally, this prediction of doom and gloom bore a major asterisk from Sorkin:
I can’t tell you when, and I can’t tell you to what extent.
Thank you. Very accurate and helpful.
Legendary investor Louis Navellier, editor Growth investorHe watched the interview and said:
No evidence was provided as to what might lead to this.
I think this was actually a very sad interview, to be honest with you.
The main problem with bears today is that they have become less “analytical” and more anxious dressed as prophecy.
The phrase “The crash is coming, but I don’t know when or how bad it will get” has been true at every point in market history. It’s not a call – it’s a disclaimer.
But Sorkin said one thing is worth addressing directly. In describing his uncertainty, he put it this way:
I’m concerned that we’re at prices that may not seem sustainable.
Either we’re living in some kind of remarkable prosperity and part of that is artificial intelligence… or it’s all overrated.
Let’s take the second half of that seriously for a moment – because it brings us back to our conversation about valuation which is exactly the kind of thinking that could get you out of a profitable position over the coming months.
Is “everything” really that expensive?
What does “overrated” even mean?
Definition of investment: Usually paying too much for a stock compared to the profits the company makes. This is the basis of the most widely used valuation metric: the price-to-earnings ratio, or P/E.
Now, let’s use micron technology (in) A prime example – and a timely one since Lewis called it “the new market-leading AI” in yesterday’s session Growth investor Flash alert.
On the surface, it looks like a poster for Sorkin’s anxiety…
According to Full Ratio, Micron’s 10-year average P/E ratio is 20.02. But today, on the heels of MU’s 228% year-to-date rise, its P/E lies somewhere in the 35x to 42x range — roughly double its long-term average cost.
Does a nosebleed evaluation mean it’s time to prepare for a plane crash?
Let’s bring profits into the mix — a better reflection of the direction Micron is headed, given the trillions of dollars in AI boom the way Hwang and Chris described on their call.
When we do that, a completely different picture emerges…
Micron currently trades at a forward P/E of about 7.5x to 9.5x
This is far less And its long-term average – and much lower than the broader semiconductor sector.
Analysts are already predicting a huge rise in Micron’s profits – yet the stock still looks cheap compared to those expectations.
Our hypergrowth investing expert Luke Lango, editor Innovation investorThis issue has been filed for several months. Here’s its reading after Tuesday’s 19% rise:
UBS finally said out loud what we’ve been discussing for months: Micron is not a boom-and-bust memory company catching a temporary wave of AI. It is an AI infrastructure company and its main product is memory chips.
This distinction is very important in terms of what investors are willing to pay for a stock.
Reframing is crucial…
Once you see Micron as AI infrastructure rather than commodity memory, the valuation picture changes.
Current revenue estimates for 2026 are $100 billion. Current estimates for 2027 are as high as $180 billion.
Locke expects that if the cycle continues through 2028, 2029 and 2030 — which is in line with Hwang’s capex runway — revenue could reach nearly $240 billion by 2030, with profit margins reaching around 80%.
Here’s Luke with the implications for the evaluation:
By then, the market should realize that this memory demand cycle is designed to continue rather than boom and bust, and should move the stock’s valuation back higher…
We call it 10 times (earnings). This is still very conservative. Even at just 10 times that multiple (including expected 2030 earnings), you’re looking at a potential Micron valuation of nearly $2 trillion in just a few years.
So, the math suggests the stock could double again from here.
That’s why the valuation picture looks very different depending on which direction you’re facing.
Do we look back? Worrying.
Looking forward? attractive.
Important warning…
This is not a free pass to micron or anywhere else without doing your homework.
You have to know what you own and why.
But when someone points to a high P/E and describes it as a crash waiting to happen, ask them what a forward P/E looks like.
Ask them about the impact of $3-$4 trillion in annual AI infrastructure spending on the revenues of companies on the receiving end of it.
And then ask them Why now? For the accident.
If they can’t give you a clear, definitive answer – maybe they’re just selling a book.
An example of why the traditional bearish playbook continues to fail
Yesterday morning, the Conference Board Consumer Confidence fell slightly to 93.1. Any reading below the historical baseline of 100 indicates underlying pessimism.
It is plausible that the bears will look at this and interpret it as a bad thing for the US consumer, which will eventually impact consumer spending and, from there, lower corporate profits, which will impact stock prices.
And for some stocks, yes, that’s a risk.
But not for all stocks
Huang’s $3 trillion to $4 trillion infrastructure forecast doesn’t show up in a survey of whether Americans plan to buy a washing machine.
So, while Sorkin points to excessive valuations and deteriorating consumer confidence, the money keeps flowing — to data centers, to HBM, and to the picks and shovels of building the most expensive technology infrastructure in history.
The bears are reading traditional indicators – which does not apply to the AI sector at this time when we have trillions of dollars in spending on the way, and are poised to make big profits and take pressure off valuations. They can avoid this mistake by monitoring actual financial flows.
Which brings us back to It happened tonight With Jonathan and Mark, which is about tracking actual financial flows.
In a market isolated from traditional signals, this is not just a trading advantage. It’s the whole ball game.
I wish you a good evening,
Jeff Remsburg
