The Recession Is Cancelled & The Bull Market Will EXPLODE Higher

追加: 2026-05-18

[00:00:00]The last 2 years have been filled with prediction after prediction of the next financial crisis. The pessimists have been running crazy promise you that destruction's around the corner. Whether it was tariffs, potential inflation, or geopolitical conflicts, everyone kept promising that financial pain was coming.

[00:00:17]But recession odds just hit a brand new all-time low on prediction markets.

[00:00:20]Calch's now showing only a 17% chance of an economic contraction. That's down substantially from the nearly 40% odds back in March of this year.

[00:00:29]Now, this comes after the US stock market executed one of the fastest market recoveries in history. The S&P is up 7 and 1/2% over the last month, and it's up nearly 17% since the market bottom at the end of March.

[00:00:42]Bull theory writes that the Nasdaq, the S&P, Russell 2000, Dow Jones, Google, Intel, Micron, and SanDisk, they are all up every single week for six straight weeks. We almost never see that.

[00:00:55]But before everyone starts with all the bubble talk, The Wall Street Journal's Gunjan Banerji, she shows that the S&P's P/E ratio has actually fallen 4% since the start of the year.

[00:01:06]So, not only are stocks pacing to have an above-average year for returns, but the underlying companies have been getting cheaper at the same exact time.

[00:01:14]Ritholtz Wealth's Ben Carlson has a great chart that shows perhaps the craziest thing about the current market run is how much of it is being fueled by the fundamentals.

[00:01:24]Earnings are going higher, so stocks are, too. Ben says, "What a concept."

[00:01:29]Now, this highlights the significant productivity, along with the revenue and profit growth that these companies have been experiencing. And this is all happening as the entire US economy continues to accelerate.

[00:01:40]Mike Zaccardi shows the median year-over-year change in EBITDA from Q1 has been the best in the last 4 years.

[00:01:47]Companies are simply just making more money.

[00:01:50]Now, a big reason that EBITDA is growing so aggressively is that demand is drastically outstripping supply for a bunch of products and services. Nvidia CEO Jensen Huang, he's considered the godfather of AI, he recently talked about the compute needs increasing 1,000% 10x over the last 2 years. Take a listen to why he says it's happening. The amount of computation necessary from generative AI 2 years ago to now agentic AI, it has gone up a thousand percent. Because the AI now has to read a lot more, use tools, reason, generate a lot of tokens.

[00:02:27]Not only that, the amount of use has gone up orders of magnitude because now for the first time AI is doing work. It's doing useful work and the return on that investment for software companies, for agentic companies like ServiceNow, is completely accretive.

[00:02:45]Now, it's great to hear Jensen talk about this, but he's pretty smart and I got a small brain. So, I wanted to understand this idea better and I asked Jordy Visser about it this weekend.

[00:02:54]Here's how Jordy explained the recent explosion in compute demand and why that then waterfalls through the economy and various companies. Take a listen.

[00:03:03]Inference really started to have an impact on things a year ago.

[00:03:08]And that was when almost every company started in their earnings talking about how inference demand was taking up. Now, inference was because we were we had launched the first reasoning models.

[00:03:20]So, I want people just again to think about let's go from chatting where the models are just literally regurgitating answers back out to where they're taking more of a thoughtful time period. Once you take longer to think out an answer, you're in the inference mode. And, you know, the analogy I've given to people is if you ask someone what 2 + 2 is, they say four without having to spend any energy. If you ask them what 17 * 28 is, they got to go through and do take more energy and it takes more time. So, they have to reason through however that means for them.

[00:03:53]At the end of this year, or last year, sorry, when Opus 4.5 was released, we went from inference and reasoning to that same inference and reasoning being about action.

[00:04:06]And so, again, simplest way for people to think about it, we had chat, and now we have co-work and code.

[00:04:15]Those two buttons are those two toggles on side Claude, since everyone now can say they use Claude.

[00:04:21]Uh that's where action started to take in. We're now these digital employees that are working behind the scenes are are are doing multi-step That just led to more demand of tokens.

[00:04:33]So, when you look at beginning of 4.5, you will see a parabola in token usage.

[00:04:39]You will see a parabola in the revenue, the annualized revenue run rate for for Claude. I mean, now it's up to 44 billion. We're at pace to be at a hundred, another 10 times or So, the parabolas are being formed by the reality by everyone that oh my god, we need more.

[00:04:59]Now, back in September is when DRAM prices started to go up. That was before Opus 4.5. That was purely from the inference needs and the memory that we needed now.

[00:05:09]Now, we've moved into the next phase.

[00:05:11]So, the reason I wrote a paper about Marvell is because we started realizing that oh my gosh, we need optical fiber because this is this is a different sort of data center. This is different inference. We got a lot of stuff going on. It's not just memory, it's action.

[00:05:26]Do this, memory, action, do this. So, that's why Corning, we talked about Corning back in November. Look where Corning stock is now. So, these stocks have all gone through this parabola for very, very valid reason, which is the earnings and the build-out necessary for the agent world. We didn't know how big it would be. We didn't know how fast the adoption would be. And this is a mistake that people have made continuously since 2013, which is they made it with the mag 7, they made it with Nvidia, and after, you know, chat GPT, in the exponential world, things move at an exponential pace, and that is a parabola. So, the IQ going up, the average the annualized run rate going up, adoption going up, there is a fundamental basis for this, and before everyone starts to go into this is the dot com bubble, demand is ahead of supply right now, and that's the big story.

[00:06:17]The next explanation from Jordyn was great, and it reinforces what Jensen was saying, but it also reinforces what Citadel has said. Citadel continues to say that one of the most important parts of the recent market recovery is that the recovery's been heavily concentrated in only a few stocks. You can see this by the fact that only 22% of stocks in the S&P 500 have actually outperformed the index itself over the last 30 days.

[00:06:41]It's the highest percentage of concentration in the last 30 years. We are watching something happen right now that has not happened in three decades.

[00:06:49]Now, there really only been two ways to make money during this bull market.

[00:06:53]You've either been in the AI trade, or you've been in the broad index.

[00:06:57]If you were in almost any other sector without index exposure, you're likely lagging the market and the high-flying AI-related companies.

[00:07:04]Now, you can clearly see the difference when comparing the S&P return over the last 2 years. It's up 42% in 2 years.

[00:07:11]When you compare that to the S&P excluding the AI stocks, it's only up 16% over the same time period.

[00:07:18]As investors though, it is very dangerous to allocate capital looking in the rearview mirror.

[00:07:23]What drove market returns in the past does not necessarily tell us where future returns are going to come from.

[00:07:29]With that said though, the amount of capital being invested by AI companies is nearly impossible to ignore.

[00:07:35]Every day, it's new headline after new headline, billions and billions of dollars.

[00:07:40]A16z recently showed that technology companies are now 55% of all US capital spending as measured in nominal GDP terms. 55% is insane growth number because considering technology companies were only 15% back in the '60s and we were around 40% back in the 1990s.

[00:08:00]So this begs the question, where is that money coming from and where is it going?

[00:08:06]Peter Diamandis writes that global corporate AI investment hit 252 billion in 2024. Private investment was growing 44% year over year.

[00:08:15]And private investment alone reached 109 billion dollars. Peter says that this is an example of money following conviction.

[00:08:23]Returns in my experience, the returns tend to show up months and years after the capital investments are made.

[00:08:30]And it's impossible to deny right now the fact that companies are shoveling money into that AI trade. So when will these companies reap the benefits?

[00:08:38]That's one of the great debates on Wall Street right now.

[00:08:40]Now me personally, my personal opinion is I am of the belief that the profits will be much larger than everyone is anticipating. But investors like you and me, we're going to have to think long-term in order to capture them.

[00:08:53]But likely everyone is underestimating how much profit is going to be generated by these investments.

[00:09:00]And lastly, if we think more short-term, there's a common mantra in public markets, sell in May and go away.

[00:09:08]That argument is that stock returns after the month of May are not worth the risk. But Creative Planning's Peter Mallouk shows that the time period between May and October, returns are still positive on average, about 7% annualized. And stocks are higher 72% of the time. So maybe that mantra isn't as accurate as everyone wants it to be.

[00:09:28]Every data point I'm seeing right now, it's telling me the same thing.

[00:09:31]Investors should be allocating money into the market and investors should be preparing for a strong continuation of the bull market. There's a lot of noise out there. I hear it every single day.

[00:09:42]Frankly, the pessimist, they're watching the recent market recovery with hatred in their hearts and minds. They don't want to see this happen. It means that they were wrong.

[00:09:51]But none of their critiques matter though.

[00:09:53]Companies across the US economy are collectively working to lay the foundation. They're laying the foundation for the next 100 years of economic growth.

[00:10:01]We're upgrading everything from our infrastructure to our power systems to our software.

[00:10:05]And the investors that clearly see this trend and can position themselves with the wind at their back, those are the investors that are going to be very happy in the coming years.

[00:10:15]That's it for today's show. Thank you guys so much for watching. Please remember to subscribe on YouTube. Our goal is to get to 1 million subscribers.

[00:10:22]If you hit the subscribe button, you'll help us get there. And I'll see all of you live from the desk of Anthony Pompliano tomorrow.