| | | | Inflation of Prices?
First, don’t miss today’s Daily Chart Setup trade idea down lower in this newsletter.
I am going to break down the wild 2025 price changes — from $10 ground beef and skyrocketing electricity to cheap eggs and deflating fashion, plus I’ll reveal the hidden investment opportunities in this economic chaos.
Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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The AI Bubble Won't Pop Where You Think It Will
Here's something that might completely change how you're thinking about this AI rally we’re in…
Everyone's worried about the wrong thing. They're watching the hyperscalers — Alphabet (GOOGL), Meta Platforms (META), OpenAI — waiting for one of them to stumble and bring this whole thing crashing down.
But that's not how this plays out.
I think we are in some sort of bubble. This may even be the mother of all bubbles, as far as everything goes. But here's the thing most people are missing about where the actual vulnerability lies.
Think back to the dot-com era for a second...
It wasn't the infrastructure companies that collapsed first — it was the thousands of companies building applications on top of that infrastructure. Sound familiar?
The Real Weak Link in the AI Chain
Think about all the apps that are being built on this AI infrastructure — those are the customers that are buying this stuff from Alphabet, Meta and OpenAI.
Those customers are essentially the dot-coms of this cycle. And just like 2000, they're the ones that'll start falling apart first when the music stops.
Now, before you start rushing for the exits, here's what you need to watch for. If we see an explosion of these little companies that do weird stuff with AI start going public — which we haven't really seen yet — that's kind of the sign that we're going into a blow-off top.
And this could keep running for a year or maybe even a few years before we push this out to redline. We may not be anywhere close to the top yet.
The Circular Money Problem That Can't Last Forever
There's another angle to this that's fascinating — and a bit troubling. Nvidia(NVDA) is in a circular firing squad kind of thing where it’s investing in all these companies and saying, hey, we're gonna give you some money if you buy our GPUs.
It's almost like leverage in the stock market, where you can buy a stock and then use 80% of that to buy more stock, and then use 80% of that to buy more stock.
Sounds great on the way up, right?
Eventually, though, you get to where you can't roll it out any further. There's a limit to how many times you can recycle the same dollar through the system before someone actually has to generate real revenue from real customers.
So I'm not saying run for the hills tomorrow. What I am saying is keep your eyes open for that wave of AI app company IPOs. When that starts happening en masse, we're probably entering the final euphoric phase. And when those customers — not the hyperscalers — start going under, that's when the real trouble begins.
The infrastructure will survive. It always does. But the application layer? That's where the carnage could happen.
Now be sure to join me live at 9:15 a.m. ET for “Morning Monster,” my market-open livestream on YouTube!
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