When Pigs Fly: How the Trillion Dollar Club Became a Value Trap for Investors

Jensen Huang: "Trust me bro" image (screen capture) from an unreputable source (WSJ)

The Trillion Dollar Club Isn't Exclusive Anymore - In fact the list of companies reaching a $1 trillion valuation is growing exponentially. Just this morning, I heard that Jim Cramer's friend, Jensen Huang (not a stock picker/ CEO of NVIDIA 😂) said (wait for it) "Marvell should/could/may/might be the next Trillion Dollar Company", (many sources) and the stock is already up another 20% in pre-market. This kind of sentiment scares me, and this is a club nobody should want to be a part of.  

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Next in Line for the Crown JP Morgan $JPM - of Course 

Watch for $JPM to break the $1t ceiling before year end (Chart reserved for members).

They Booted Walmart (from the $Trillion Pig Trap), when they determined that the recovery was K shaped, yet the fact that it made the grade (chosen) helps explain why Walmart was driven to such a sky-high valuation in the first place. Also explains why 1 trillion dollar market caps is so conspicuously telegraphed by the live cable news networks. These are the obvious whisper number targets... I should've realized this was a trend, way back when Microsoft hit the $1t number. Today Microsoft trades at a 3t market cap. Stocks being purposely driven to sky-high valuations? uh...yeah

How'd we get here? When the geniuses in Washington DC decided that the best way to deal with a flu pandemic was to print $9T dollars, that money was immediately put to work in where else? - BIG TECH. 

All the names on the list were already well capitalized, so when the Fed finally let its foot off the gas, momentum continued to carry it. Apple,  Google, Amazon, they don't care about money orienting to cure the flu, and they don't need to borrow.... Today there's a massive ecosystem of strategic partnerships fueling a massive multi-billion-dollar investments in which multi-billion-dollar investments where major tech companies, hardware manufacturers, and model developers fund each other. The feedback loop fuels the bubble 

• Nvidia & OpenAI: Nvidia—the leading supplier of AI chips—is heavily invested in AI model developers.
• AMD, Meta & OpenAI: Hardware competitor AMD struck a landmark deal valued at over $100 billion,with Meta, where Meta will buy 6 gigawatts of AI computing power from AMD. In return, Meta receives stock warrants for up to 10% of AMD’s equity.
• Amazon, Google & Anthropic: Alphabet (Google) and Amazon both made massive multi-billion-dollar investments into OpenAI rival Anthropic. In exchange, Anthropic committed to using Amazon Web Services (AWS) for AI training and Google's custom chips and cloud infrastructure.
• Nvidia & CoreWeave: Nvidia has heavily invested in private and public companies within its supply chain and customer network, including pumping billions into AI data center provider CoreWeave. 

I remember - not so long ago when Microsoft hit a $1 trillion market cap on April 25, 2019. It was the third U.S. company to do so (after Apple in 2018 and Amazon shortly after). Fueled by earnings; It closed the day a bit below but crossed it again later.

The 3rd Winning Pig in the series was immediately hyped by - you got it - CNBC [link to article] 

Microsoft hits $1 trillion market cap for the first time as stock jumps on earnings beat

The AI related rotation continues: The screen-shot below shows which names drove markets higher into last weeks close. Today, $HPE, & $MRVL... ( Somebody is making out like a bandit, on this rotation schedule, and it ain't me, I can assure you.

All The Usual Suspects 

Sentiment Indicators Pinned in the Red: 

This is the most extreme bullish sentiment - as expressed by the CBOE options Total Put/Call Ratio (the $CPC) that we've seen since 2021.   

The $VXX & $VIXY ($VIX short term futures) have also traded to new record lows. The market is either pricing in a very dull summer, or investors are ridiculously complacent. Another glaring example of $VIX indices (supposed to be risk indicators) being heavily shorted as usual.  

Read: Technically They Can't Short the VIX. Here's How They Do It Anyway

A Deep Dive into the Most Manipulated Indicator on Wall Street — and the Proof Is Right There in the Charts [link] 

Next up: More cracks forming in the Mag7 floor. Stay tuned.

Take care,

AA

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