The boom loop we’ve been discussing for the past few months continues to materialize in corporate earnings.

More compute. More revenue. More profit. More compute (…). 

We’ve seen it in the earnings of chip and memory stocks. 

Now, it’s broadening. 

Let’s step through the AI stack.

Start with the chips.

As we’ve discussed in these notes, Nvidia put up another huge quarter — almost $82 billion of revenue in a single quarter, more than ten times its revenue of three years ago (and guided to $91 billion for the next). Its CFO told the market AI infrastructure spending is now on track to reach three to four trillion dollars a year by the end of the decade. 

Those chips have to be built.

Taiwan Semiconductor, which manufactures the most advanced ones in the world, reported a 20% jump in revenue in a single month and greenlit $45 billion in new capacity.

The chips can’t compute without memory.

Micron posted $23.9 billion in its most recent quarter, up 196% from a year earlier, and guided to a record $33.5 billion quarter at margins near 80%. Moreover, Micron has already sold out its entire 2026 production of these chips, under binding contracts. This week, the valuation crossed $1 trillion.

The chips also produce oceans of data that needs to be stored.

SanDisk reported $3 billion in a quarter and then followed it with a $5.9 billion quarter — a near doubling of revenue in ninety days.

Then the data has to be organized and put to work.

This week, Snowflake (the data-cloud company) reported product revenue of $1.33 billion, up 34%, the strongest quarterly dollar growth in its history. It raised full-year guidance, signed a $6 billion infrastructure deal with Amazon, and told us the number of customers using its AI tools jumped from 9,100 to 13,600 in a single quarter. The stock rose 37% in a day.

The AI applications need a database to run on.

MongoDB just reported revenue up 25%, its cloud database growing 29%, as it positions itself as the working memory for the coming wave of AI agents. It raised guidance too. The stock trading up as much as 36%. 

And all of it has to run on servers.

Today, Dell reported an AI server backlog of $51 billion, after AI-server revenue grew 757% compared to the same quarter last year. It raised its target for this year toward $60 billion. The stock rose 40%.

So, while the daily headlines argue tenths of a tick in inflation and the price of oil, every single layer of the AI stack is telling this story: accelerating demand, raised guidance, and not enough supply.

This is the boom loop we’ve been describing, broadening across the entire AI stack — which should broaden across the entire economy.

As we’ve discussed over the past three years, AI is indeed making the pie bigger. The trillion-dollar valuation club is indeed growing.

In a world racing toward abundance, you want to own the scarce things that abundance can’t exist without.

That’s what our two portfolios are built around. Our AI-Innovation Portfolio owns the scarce physical inputs the buildout cannot exist without — the power, the fiber, the connectors, the chip equipment, the network edge. Our Billionaire’s Portfolio owns the still-undervalued producers of the hard assets that feed it — the copper, the gold, the oil and gas, and the legacy technology being revalued as AI-critical infrastructure.

Two portfolios driven by one thesis. If you’re not yet a member, it’s a good time to get positioned for what the stack just told us is coming.

Learn more here. 

Yesterday, we talked about Trump’s Iran strategy, and how he has repeatedly referenced the “Venezuela model“– take control of the oil, fund the country and the restructuring, prevent the re-emergence of the old regime.

With that in mind, Trump held a cabinet meeting this morning. And in the middle of it, he turned to Marco Rubio and asked, “Cuba and Venezuela, what’s going on there?”

Rubio said Venezuela is in “a three-phase process … stabilization, recovery, and transition.”

Then he walked through the mechanism.

Since January 3, over 10 million barrels of Venezuelan oil have been delivered to the United States. He said, the industry is being “professionalized for the first time ever.”

The crude is sold “in the market at market rates.” And “the money is going to an account in the United States controlled and monitored by Treasury, audited by KPMG. And it’s for the first time ever, the money’s not being stolen. It’s going to the benefit of the Venezuelan people.”

That’s the Venezuela model stated by the Secretary of State. A Treasury-controlled account. KPMG audit. Market sales. Revenue restructured away from the regime, toward the people.

As we discussed in my note yesterday, this model applied to Iran would have to involve controlling Kharg Island (the terminal that moves the overwhelming majority of Iran’s crude). 

Is that why Bessent has said he expects crude prices to be “lower than pre-conflict levels when this ends” (his exact words today)? 

The U.S. Department of Treasury already controls Iran’s money. The U.S. Department of War controls the travel of oil. And with that, there’s no need for a big kinetic seizure. Time does the work (as Trump has said, “time is on our side”). 

Trump wants cheap gas. And cheap gas requires controlling the swing capacity and the chokepoints. That means Iran and Venezuela under the same architecture, with the Saudis and Abraham Accords members under the “aligned partner” architecture already negotiated.  

Another weekend, another deal that was supposed to be close.

The anticipation built across the weekend included “talks,” “good signs,” a “framework” near.

And again, nothing.

Instead, the U.S. struck Iranian sites, and Iran is now calling those strikes a violation of the ceasefire. We’ve seen this movie plenty of times now over the past three months.

Remember, back in my May 11 note (here), we talked about the Netanyahu interview with 60 Minutes. He said the war isn’t over — “it’s not over because there’s still nuclear material, enriched uranium that has to be taken out of Iran.”

Trump reiterated that last night, posting that the enriched uranium would need to be turned over and destroyed, or destroyed in place under inspection.

Until it happens, we should view the conciliatory headlines as theater, and the strikes as substance.

And the other key factor: oil.

Oil is the tool, the leverage, the revenue that funds the regime, the proxies and the weaponry. It’s the lever Iran has always used to manufacture instability in the global economy.

This is why “a deal” seems unlikely. Trump has pointed, repeatedly, to Venezuela as the model. And in Venezuela the U.S. effectively controls the oil — to fund the country and restructuring, and to prevent the re-emergence of the old regime.

For Iran, this model would include taking control of Kharg Island (the terminal that moves the overwhelming majority of Iran’s crude). And it’s hard to imagine the current Iranian counterparts coming to any agreement like that.

For now, time does the work. The export machine continues to choke and revenue collapses. 

Let’s talk about the Fed.

Kevin Warsh is on the job, sworn in Friday.

Warsh has said, repeatedly, that the Fed should talk less — less forward guidance, less telegraphing, fewer officials shaping markets with words.

Yet, what does the Fed calendar show for Warsh’s first week? A long line of Fed governors with public speaking engagements. The leadership has changed. The question is, how entrenched is the culture?

We may get some signals on that this week. 

Still, as we discussed last week after Nvidia’s earnings, the largest industrial buildout in modern history is underway. It’s funded, profitable and accelerating. Against that tsunami, the day-to-day market noise looks like ripples on the surface.

We saw it again today — another new record high for stocks, led by AI infrastructure, and the scarce physical inputs that feed it.

We have 25 stocks in our AI-Innovation Portfolio, focused on the companies powering this AI infrastructure buildout — for what Elon has called a coming economic “tsunami.” We have been positioned for it since June of 2023, but the buildout remains in the early stages. If you haven’t joined us yet, you can do so here …

Let’s talk about Nvidia earnings.

It was three years ago, almost to the day, that Nvidia reported a growth shock that changed the world.

Remember, Jensen Huang told us that the world was beginning a trillion-dollar transition from general purpose computing to accelerated computing. And he said it started with the ChatGPT moment (the launch of OpenAI’s generative AI model, which crystallized productization of AI). 

He said the demand for Nvidia’s AI data center chips was so steep that the growth he just reported (in May of 2023) would be even bigger the following quarter. Moreover, he said the hyper-growth would continue for the foreseeable future.

That was the Nvidia moment. It was the moment the world realized AI was about to reinvent computing.

With that, the transformation has been bigger and faster than Jensen predicted. Still, there has been plenty of doubt about the significance and the durability of the AI revolution along the way. 

Then we had a series of “moments” earlier this year, that gave clear signals that the entire AI ecosystem wasn’t just sustaining, it was removing the ceiling on what is thought as possible for the economy.  

First, it was data storage. Sandisk reported $3 billion in revenue and then guided to $4.4 to $4.8 billion for the very next quarter — a 50% sequential leap in 90 days. The same shape as Nvidia’s famous 2023 guide. It was the moment the world realized AI doesn’t just need chips. It needs endless storage to hold the oceans of data those chips produce.

The Nvidia moment for storage had arrived. 

Then it was the chips themselves.

Taiwan Semiconductor, the company that manufactures the world’s most advanced semiconductors, reported a 20% jump in revenue in a single month, in what is normally a quiet, post-holiday lull. At the same time, its board greenlit a $45 billion plan to build more capacity. The bottleneck was starting to break.

The Nvidia moment for chips had arrived.

Then (in his Februrary earnings call) Jensen named the next moment himself. He said the “ChatGPT moment of agentic AI” had arrived.

Consider what that phrase means.

Not the Nvidia moment, but the ChatGPT moment (like, the beginning!). 

“Agentic” AI is moving the AI revolution into another gear. It’s the difference between AI as a tool a person uses, and AI as a worker that operates on its own.

And it’s always on, and always inferencing (always reasoning, producing output).

This is why in his February earnings call, Jensen said this line over and over: “compute equals revenue.”

Today, he said “it is very clear compute is revenues.”  Then he added, “compute is profit.”

Nvidia is proving that. 

The numbers in Q1 were jaw-droppers. Almost $82 billion of revenue in the quarter. That’s more than 10x the revenue of just three years ago. Almost $38 billion of revenue growth from the same period just last year. This, with net income margins in the mid 50s(%). 

Then there’s the guide. Nvidia told the market to expect $91 billion next quarter — another double-digit jump.

And Nvidia’s CFO told analysts that AI infrastructure spending is now on track to reach three to four trillion dollars per year by the end of this decade. 

That’s three to four trillion dollars, annually.

We’ve watched this estimate climb in real time. Last October, Jensen said there was half a trillion dollars of demand visible. By March, he had raised it to a trillion. Tonight, they put it at a three-to-four-trillion annual run rate.

With that, as we’ve discussed here in my notes, the day-to-day noise ( the rate guessing, the tariff headlines, the market swings on a given afternoon) is a conversation about ripples on the surface.

Underneath the surface, the largest industrial buildout in modern history is funded, profitable, and accelerating.

Yesterday, we talked about the repricing in the bond market — driven by a Fed regime change, which includes the end of forward guidance and the end of the implicit global backstop (no longer automatic, but ‘conditional’).

Today, we got to see ‘conditional’ materialize. 

Scott Bessent was in Paris, delivering the keynote at the No Money for Terror conference. He told the room of global policymakers and financiers this:

“The United States is hardly alone in facing the scourge of terrorism, especially from Iran. Yet, too often, we seem to be alone in our resolve to thwart it.” 

He then called on Europe, by name, to take action and expose Iran’s financing networks — unmask shell and front companies, shutter bank branches, dismantle proxies.

And he called on partners in the Middle East and Asia to root out Iran’s shadow banking networks (the China-Iran financial pipeline).

But this “alone in our resolve” statement was clearly aimed at Europe, along with “no room for excuses.”

We’ve talked about the Trump plan to restructure global trade and realign the world (away from China, back toward the U.S.), anchored by “burden sharing” — where allies and trading partners pay for access to safety (U.S. security guarantees), stability (the dollar and U.S. capital markets), and markets (U.S. consumers).

These are all no longer automatic, but conditional — conditional based upon alignment. 

And Bessent is making it clear that alignment includes: designate, expose, shutter, and dismantle Iran’s financing.

Or, stay ambiguous, as Europe has to this point, and discover what “conditional” looks like in practice.

And we’ve talked about the levers that Trump, Bessent and the new Fed Chair can pull to force political alignment — through consequence, not argument.

Withdraw all the backstops.

Let the bills come due (i.e. defense). Let the energy shock expose Europe’s energy dependence. Let the European financial system work through stress without the Fed’s dollar liquidity assistance.

Let the political class face the consequences of the costs their voters are no longer willing to pay.

With all of that said, remember, the endgame isn’t Iran. It isn’t Europe. It’s China.

And the China trip has become the trigger for phase two of the Trump administration’s effort to align Europe.

With Europe aligned, the global pressure can be applied to China, in coordination — to economically isolate China, further weaken its global influence, and end its multi-decade predatory economic strategy that nearly ushered in global dominance of the Chinese Communist Party.

Jerome Powell’s term as Fed Chair officially ended last Friday. He’ll continue in the role until the new Fed Chair, Kevin Warsh, is sworn in this coming Friday. 

But the bond market is already pricing a regime change.

German 10-year Bund yields broke out to 15-year highs at 3.19%. UK 10-year Gilt yields hit 18-year highs at 5.20%. The U.S. 10-year traded as high as 4.63% today — the highest level since days before Trump was sworn into office last year.

Remember, the Warsh doctrine is smaller balance sheet, lower rates (“AI is going to make everything cost less”), and true structural reform – to break the entanglement of the Fed with government financing.

If we listen to what Warsh has been saying since the summer of last year (when Trump began to turn the screws on Powell and Warsh’s name emerged as the Trump candidate), the days of the Fed backstopping bad fiscal policy and bad corporate behavior, via quantitative easing, should be over.

The fiscal dominance that’s been funded by the Fed for the better part of the past 18 years should give way to fiscal discipline (with crisis management given back to the Treasury).  

In this regime, the distortion of markets and outcomes created by QE is over. That should ultimately be good for dollar assets, good for the reserve currency status of the dollar.

So why are rates moving up?

Because the structural change under Warsh removes the Fed’s thumb from the scales.

Powell’s Fed manipulated outcomes through QE (outright buying assets) and through its “forward guidance” (shaping market opinion with words and forecasts, to create outcomes the Fed wanted). 

This new Fed regime is about less manipulation, less telegraphing, less Fed demand for long-dated Treasuries, more dissent and more volatility.

With that, the bond market is figuring out where yields should be, without the Fed’s thumb on the scales. Even if this Fed regime and the Treasury strike an accord to restore fiscal discipline, the bond market will doubt it, until proven otherwise.

Now, the biggest change under Warsh will be the Fed’s role on the international stage. The era of global coordinated central banking, led by the Fed, is likely over.

For fifteen years, the Fed has been the implicit backstop for sovereign debt fragility — not just in the United States, but globally. Through dollar swap lines. Through emergency asset purchase programs.

With Warsh (with the Trump-led Fed) that backstop is now conditional.

That’s why European rates are breaking out to highs not seen since the most intense days of the global financial crisis.

We talked on Monday about whether the Trump/Xi meeting would actually take place in Beijing, or if the trip would be cancelled or postponed (for a second time).

To this point, trade negotiations led by Bessent and Greer have been on neutral ground — Geneva, Madrid, Kuala Lumpur, Paris.

Trump landed in Beijing today, along with a delegation that includes Jensen Huang (Nvidia) and Elon Musk.

Here’s what he posted on Truth Social heading into the trip:

“I will be asking President Xi, a Leader of extraordinary distinction, to ‘open up’ China so that these brilliant people can work their magic. I will make that my very first request.”

“Open up” China.

That has been the false promise of the past few decades.

Every administration since China entered the WTO in 2001 has asked for it. The result has been the same. American companies China-influenced. Trillions in U.S. consumer spending channeled through Chinese manufacturing. IP theft on a mass scale. Supply chain dominance built. Critical commodities cornered, from rare earths to critical minerals to solar to batteries.

And with that, the Chinese economy has grown 50x over the past 35 years. Over the same period, the U.S. economy has grown just 5x.

That explosive growth made China the second largest economy in the world, and it was converging on the U.S. economy early in the pandemic. 

How did they do it?

It was no accident. They have executed on a plan to become the biggest, most powerful economy in the world. They did so, in large part, by undercutting the world on price, which enabled them to build an export monopoly. And they accomplished this by manipulating their currency — keeping it cheap. The world allowed it. They liked cheap stuff.

And they liked what China did with the dollars it collected from the cheap stuff. They plowed it into Treasuries, supplying cheap credit for U.S. consumers to buy more cheap stuff. And so the cycle has perpetuated through the years — transferring wealth from the U.S. (and the West) to China. 

That’s the trade imbalance that has broken the global economy, and has funded China’s influence building over the past decade.

And that’s what Trump’s trade deals are repairing and realigning.  

With that, it was five years ago that then-Secretary of State Mike Pompeo’s Nixon Library speech — a call for “a new grouping of like-minded nations, a new alliance of democracies” to take action against the Chinese Communist Party.

Pompeo had been alliance-building with Australia, India, Japan, Vietnam, South Korea. His warning then: if we don’t act, “the CCP will erode our freedoms and subvert the rules-based order that our societies have worked so hard to build.”

The bilateral architecture Bessent has been building over the past year is the Pompeo framework. Tokyo this week. Korea today. The Quad expanded. Gulf states. Israel publicly moving “from aid to partnership.”

As we’ve discussed in my notes, the aligned-partner architecture gets coordinated U.S. support: security, energy, dollar liquidity.

So going into this meeting, what’s different?

What’s different is what the Trump administration has done to shore up that architecture.

1) The dollar has been reaffirmed as the world’s reserve currency.

And reinforced through the digital architecture — regulated Treasury-backed dollar stablecoins are now the global digital payment infrastructure.

2) The U.S. is the world’s largest oil producer.

The Iran war has positioned the U.S. as the replacement supplier for Asian buyers who can’t access Persian Gulf oil. Trump named the U.S. as “a big filling station” on Sunday. We have economic and military control over Venezuelan oil. And we will soon effectively control Iranian oil flows. 

So, Trump goes into meetings in a position of strength.  And he has the AI chip carrot  (Nvidia’s H200 chips), the Taiwan stick (a $14 billion arms package), and the China tariff truce (currently suspended triple-digit tariffs) to leverage. 

April CPI came in hot this morning.

Headline inflation jumped to 3.8% from 3.3%.

Core CPI accelerated to 2.8% from 2.6%. The spike in oil prices is clearly in the inflation numbers. 

But what accompanied the bottom in inflation, which happened before the Iran strikes?

The Fed’s December stop and reverse on the balance sheet — the return to balance sheet expansion (which is inflationary). 

And as you can see in the next chart, with the Fed holding the effective Fed Funds Rate at 3.64% throughout the year, today’s 3.8% headline inflation print creates negative real rates (Fed Funds Rate minus headline inflation) for the first time since 2023. 

As you can also see in the chart, the last time real rates dipped into negative territory was late 2019 — and the setup was identical. The Fed flip-flopped — they followed a quantitative tightening campaign by returning to balance sheet expansion, to respond to “strains in the money markets” (i.e. tightening liquidity conditions).

Liquidity tightened. The Fed prioritized liquidity over inflation. Real rates went negative.

All of this comes the week Kevin Warsh takes the helm as Fed Chair. And his view has been, smaller balance sheet, lower rates.

In my last note, we talked about the latest sentiment massage from Trump on Iran.

Last week, it was Operation Epic Fury “is over.”

Though operationally (the reality, the physics) nothing had changed.

And then Sunday afternoon, the ninth sentiment massage of the past ten weeks ended with this…

From Wednesday’s “OPEN TO ALL” peace pivot to Sunday’s public rejection. The sentiment massaging cycles keep getting shorter — six days, then five, then four. The reality on the ground has continued in one direction. 

Then on Sunday night, Netanyahu sat down with 60 Minutes and confirmed the war isn’t over — “it’s not over because there’s still nuclear material, enriched uranium that has to be taken out of Iran.”

Trump reiterated that today, saying the uranium has to come out.

Also, while taking press questions in the Oval Office, Trump said this about the war:  he said he’d expected the stock market to drop 20-25%. He said he was willing to do it because Iran couldn’t have a nuclear weapon and the threat had to be addressed.

The stock market is at new record highs because the geopolitical strategy is fueling a wartime industrial mobilization, and the AI revolution is transforming the economy.

The “boom loop” we’ve been describing is clearly showing up in the numbers. More spending on AI infrastructure is leading to more revenue, is leading to more spending on AI infrastructure. 

More capacity equals more revenue.

With that, the past few weeks have been overwhelmingly about earnings and the state of AI. 

Let’s talk about the big events of this week.  

Kevin Warsh should take the helm as Fed Chair on Friday. The new Fed regime starts, and the globally coordinated central bank era (likely) ends.    

On that note, Bessent is in Tokyo today through Wednesday meeting with the Prime Minister, Finance Minister and Bank of Japan Governor. Aligned partners get U.S. support (security, energy, dollar liquidity).

And the big one:  Trump is due to meet with Xi in China, traveling Wednesday night. And they are said to be bringing a large delegation, cabinet members, and American business leaders. This sounds like the Davos playbook (when they visited the World Economic Forum earlier this year, and set the tone for American leadership).  

Beijing is not Davos. 

As we’ve discussed, the administration has made no secret over the past year that dealing with China’s predatory three-decade economic war is priority number one. And as we’ve discussed, the industrial mobilization under Trump, and the fortification of the Western Hemisphere, seems to be for a bigger confrontation than Iran.

With that, putting the President physically in China introduces unnecessary risk at worst — and at best, reduces control and leverage. Even our trade negotiations (led by Jamison Greer and Scott Bessent) haven’t been IN China. They’ve been in neutral sites (Switzerland, Spain, Malaysia, France).  

Although Trump played up his excitement about the visit today, I suspect the chances of it being cancelled, or postponed (for a second time) are not small. 

We will see.

The question: if it’s pushed again, what will be the reason? 

When the April meeting was pushed “5-6 weeks”, it was said to be conditional on China helping unblock Hormuz. That hasn’t happened.

If it gets pushed again, it reinforces the direction of travel toward confrontation with China.