Stock Picks During All Time Highs
550: Semiconductors, Hanta Virua Chaos
Good morning,
This week we are getting back on our regular schedule with Arb Letter given I had little time with travel last week.
Markets went berserker mode last week and yesterday and on top of that we have constant global headlines breaking on everything from Hanta Virus to Iran to extraterrestrial disclosures.
Big post today and a metric shit ton to cover.
For some reason we are continuing to see a massive influx of new subscribers so welcome to everyone. Maybe it is the market conditions, maybe it is the ripper AI plays we have nailed this year. Regardless, welcome kings.
Today we are going to review:
Where the stock market is (are we in a bubble?)
Refreshed stock picks
Layoff news (some big updates)
Crypto thoughts for Spring and Summer
Hanta Virus and other breaking global news points
On top of all that we have CPI this morning (Tuesday, May 12) dropping at 8:30 AM ET.
Buckle up, rest of the week is going to be spicy.
Is A Bubble About to Burst?
Well folks the S&P 500 closed at a new all-time high of 7,412 yesterday propelled higher by semiconductors and the AI mania that has defined the last year.
The big question online right now and in most finance circles is: are we in a bubble that is close to bursting? Depending on who you speak to you are going to get wildly different answers.
Some point to very real technical and historical indicators that do show cause for SOME concern.
These include:
Extremely elevated (and sometimes laughable) valuations in parts of the AI and semiconductor sector, with certain names trading at levels that imply years of near-perfect execution and continued exponential demand growth
Record concentration in major indices, where a small handful of size lord mega-cap tech companies now account for an outsized percentage of total market performance and index weighting
Rising global debt burdens and structurally higher interest rates, which historically create pressure on richly valued growth assets if liquidity conditions tighten unexpectedly
Signs of excessive optimism across sentiment indicators, with many investors and retail degens increasingly conditioned to buy every dip under the assumption that central banks and liquidity will ultimately support markets (guilty lmao)
A growing disconnect between certain asset prices and underlying economic realities, particularly as we have consumers continue facing elevated costs, weakening savings rates, and pressure from higher borrowing costs. On top of that the wealth gap keeps growing at a ridiculous spread
Let’s be honest though, we’ve made a lot of money in this chaos lol. Currently Polymarket has a 66% chance that SPY trades over $760 this month. Can the rally really continue? Overnight trading last night in Asia looked a bit grim…..
Semiconductor stocks are the stars of the show in the tech and AI explosion. Kevin Gordon on X highlighted yesterday that the semiconductor industry is now a record 17.4% of the S&P 500's market cap.
Pretty absurd.
Semis are now trading 63% above their 200 day moving average which is the largest margin since the Dot Com Bubble Burst (Barchart).
We’ve absolutely printed on names like AVGO 0.00%↑ NVDA 0.00%↑ INTC 0.00%↑ AMD 0.00%↑ QUIK 0.00%↑ and others, but it does beg the question, is a violent correction coming soon? What names still have some room to run if not?
What is going to happen?