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Last call for tonight’s Convergence Summit… no surprises from PCE inflation… a ceasefire extension… why bears keep misfiring … a tale of two valuations with Micron… follow the money, not the mood
Before we dive in, a reminder about tonight…
At 8 p.m. Eastern, Jonathan Rose and Marc Chaikin are going live at their Convergence Summit.
If you’ve missed our recent Digests detailing what’s happening, here’s the short version…
These two trading veterans have spent the last several months combining two of the most powerful “smart money” indicators into a single “Convergence Trigger.”
Jonathan’s indicator tracks concentrated, high-conviction positioning that shows up in the market before a big move. Marc’s tracks institutional money flow – where the big players are actually moving capital in real time.
This combined trigger, back-tested across nearly 200 real trades, produced an 81% win rate and 147% average gain – and filtered out two of every three losing trades.
This outperformance makes sense when you understand more about Jonathan and Marc…
During the 2008 financial crisis – when most investors were watching their portfolios cut in half – Jonathan made over $6 million in the markets.
Meanwhile, Marc created the Money Flow indicator now embedded in every Bloomberg terminal on the planet. He also built research tools for the legendary traders Paul Tudor Jones and George Soros.
Tonight, for the first time, they’re bringing that combined experience directly to you – free, starting at 8 p.m. Eastern. Just click here to register and we’ll see you this evening.
A quick tour through the headlines
The Fed’s preferred inflation gauge came in this morning, and markets got what they were hoping for – or at least, what they needed to avoid a panic.
The Personal Consumption Expenditures (PCE) Price Index rose 0.4% in April on a monthly basis, putting the 12-month rate at 3.8%. Both figures matched economist forecasts. More importantly, core PCE – which strips out volatile food and energy prices – rose just 0.2% for the month, coming in softer than the 0.3% estimate. The annual core rate held at 3.3%, in line with expectations.
That soft monthly reading supports the hope that the burst of inflation seen in March may have been a one-month spike rather than a new acceleration – exactly what nervous investors want to see.
Still, the bigger picture hasn’t changed. Annual inflation is still running nearly double the Fed’s 2% target. And consumer spending in April was propped up by a drawdown in savings – the personal savings rate dropped to 2.6%, its lowest since June 2022. So, price pressures remain a key issue.
Meanwhile, oil prices are pulling back, erasing earlier gains, after news that U.S. and Iranian negotiators have extended the current ceasefire.
Here’s Axios:
U.S. and Iranian negotiators have reached an agreement on a 60-day memorandum of understanding to extend the ceasefire and launch negotiations on Iran’s nuclear program, but President Trump has yet to give his final approval… Iran has also not confirmed its acceptance.
Still, the markets are optimistic.
As I write, the Dow has just made it back to even, while the Nasdaq is approaching 1% higher – a split that tells you exactly where the money is flowing.
Speaking of the 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 Corp. (NVDA) CEO Jensen Huang said during his company’s latest earnings call last week:
The capex is at a trillion dollars, and it’s growing toward the three to four [trillion-dollar mark.
He was referring only to spending from hyperscalers like Alphabet Inc. (GOOGL) and Amazon.com Inc. (AMZN), which excludes the neoclouds and other segments of the supercomputing market entirely.
Nvidia CFO Colette Kress was even more specific about the tsunami of capex on the way:
With analysts now forecasting hyperscale capex to exceed $1 trillion in 2027 and agentic AI beginning to proliferate across all industries, AI infrastructure spending is on track to reach $3 to $4 trillion annually by the end of this decade.
How far ahead of consensus is that?
Needham analyst Laura Martin’s analysis shows Wall Street currently models hyperscaler capex hitting $1.03 trillion in 2028 – a fraction of what Huang is projecting just two years later.
This gap matters.
The bears would have you believe that the market is dangerously overextended – and if we use backward-looking valuation metrics, they’re right. But if Huang is right – focusing on the future – this overvaluation concern is exaggerated, possibly flat-out wrong.
So, as you’re about to see, when Andrew Ross Sorkin goes on television warning of a crash, it’s critical that we analyze the “why?” behind his bearishness.
“We will have a crash” – and other useless comments that tell you nothing
On Sunday, CBS rebroadcast its 60 Minutes interview from last October with financial journalist Andrew Ross Sorkin. He was promoting his new book on the 1929 crash and warning that today’s market echoes that era.
From Sorkin:
I can assure you, unfortunately, I wish I wasn’t saying this, we will have a crash.
Of course, that prediction of doom and gloom carried a key asterisk from Sorkin:
I just can’t tell you when, and I can’t tell you how deep.
Thank you. Very precise and helpful.
Legendary investor Louis Navellier, editor of Growth Investor, saw the interview and said:
He gave no evidence of what would trigger it.
I think that was actually a very sad interview, to be candid with you.
The main problem with the bear case today is that it’s less “analysis” and more so anxiety dressed up as prophecy.
“A crash is coming, I just don’t know when or how bad” has been true at every point in market history. It’s not a call – it’s a disclaimer.
But Sorkin said one thing worth engaging with directly. Describing his uncertainty, he framed it this way:
I’m anxious that we are at prices that may not feel sustainable.
We are either living through some kind of remarkable boom and part of that’s artificial intelligence… or everything’s overpriced.
Let’s take the second half of that seriously for a moment – because it circles us back to our conversation about valuation and is exactly the kind of thinking that could shake you out of a profitable position over the coming months.
Is “everything” really overpriced?
What does “overpriced” even mean?
The investment definition is usually paying too much for a stock relative to the earnings the company generates. That’s the foundation of the most commonly used valuation metric: the price-to-earnings ratio, or P/E.
Now, let’s use Micron Technology (MU) as a live example – and it’s a timely one since Louis just called it “the Market’s New AI Bellwether” in yesterday’s Growth Investor Flash Alert.
On the surface, it does look like a poster child for Sorkin’s concern…
According to Full Ratio, Micron’s 10-year average trailing P/E ratio is 20.02. But today, in the wake of MU’s 228% year-to-date surge, that trailing P/E sits somewhere in the 35x to 42x range – roughly twice as expensive as its long-term average.
Does this nosebleed valuation mean it’s time to prepare for a crash?
Let’s bring forward earnings into the mix – a better reflection of where Micron is headed, given the AI boom and the trillions of dollars on the way that Huang and Kress described on their call.
When we do this, an entirely different picture emerges…
Micron currently trades at a forward P/E of roughly 7.5x to 9.5x
That’s far below its long-term average – and well below the broader semiconductor sector.
Analysts are already projecting a massive surge in Micron’s earnings – and yet the stock still looks cheap relative to those projections.
Our hypergrowth investing expert Luke Lango, editor of Innovation Investor, has been making this case for months. Here’s his read after Tuesday’s 19% surge:
UBS finally said out loud what we’ve been arguing for months: Micron isn’t a boom-and-bust memory company catching a temporary AI wave. It’s an AI infrastructure company whose main product happens to be memory chips.
That distinction matters enormously for what investors are willing to pay for the stock.
That reframing is critical…
Once you see Micron as AI infrastructure rather than commodity memory, the valuation picture shifts.
Current 2026 revenue estimates sit at $100 billion. Current 2027 estimates sit at $180 billion.
Luke projects that if the cycle continues through 2028, 2029 and 2030 – which aligns with Huang’s capex runway – revenues could reach roughly $240 billion by 2030, with profit margins running toward 80%.
Here’s Luke with the valuation implication:
By then, the market should realize that this memory demand cycle is built to last rather than boom-and-bust, and should re-rate the stock higher…
Call it 10 times [earnings]. That’s still super conservative. And even with that mere 10-times multiple, [including projected 2030 earnings] you’re looking at a potential valuation for Micron of close to $2 trillion in just a few years.
So, the math says the stock could rattle off another double from here.
This is why the valuation picture looks so different depending on which direction you’re facing.
Looking backward? Alarming.
Looking forward? Attractive.
One important caveat…
This isn’t a free pass to cannonball into Micron or anywhere else without doing your homework.
You need to know what you own and why.
But when someone points at a lofty trailing P/E and calls it a crash waiting to happen, ask them what the forward P/E looks like.
Ask them what $3 to $4 trillion in annual AI infrastructure spend does to the revenues of the companies on the receiving end of it.
And then ask them why now for the crash.
If they can’t give you a specific, clear answer – maybe they’re just selling a book.
An example of why the traditional bearish playbook keeps misfiring
Yesterday morning’s Conference Board Consumer Confidence dipped slightly to 93.1. Any reading below the historical baseline of 100 signals underlying pessimism.
It’s reasonable for bears to look at this and interpret it as bad for the U.S. consumer, which will eventually bleed into consumer spending, and from there, reduced corporate earnings, which will weigh on stock prices.
And for some stocks, yes, this is a danger.
But not for all stocks.
Huang’s $3 to $4 trillion infrastructure projection doesn’t show up in a survey on whether Americans plan to buy a washing machine.
So, while Sorkin points at stretched valuations and consumer confidence deteriorates, the money keeps flowing – into data centers, into HBM, and into the picks-and-shovels of the most expensive technological infrastructure buildout in history.
The bears are reading the traditional indicators – that don’t apply to the AI sector at this time when we have trillions of dollars of spending on the way, poised to goose earnings and take pressure off valuations. They could avoid this mistake by watching the actual money flows.
Which brings us back to tonight’s event with Jonathan and Marc, which is all about tracking actual money flows.
In a market this insulated from traditional signals, that’s not just a trading edge. It’s the whole ballgame.
Have a good evening,
Jeff Remsburg
