Waiting for Iran
The United States is waiting for Iran’s response on the plan to open the Strait of Hormuz and to begin negotiations on nuclear power and weapons issues.
Markets and Stocks
Yes, the market is over bought but the outlook remains positive. Trading in and out of the market is not a winning strategy. Stay in the market and ride out pullbacks.
I continue to be positive on domestic equities. The economy is in pretty good shape. Earnings are tremendous. Momentum is incredible. The Fed will not raise rates anytime soon.
Both the S&P 500 and the Nasdaq Composite have been up for six consecutive weeks.
The Nasdaq was up 4.5% this week. The broad index rose 2.3%.
On Friday the S&P was up 0.84% to 7,399. The Composite rose 1.71% and finished at 26,274.
West Texas Intermediate closed the week at $94 a barrel. I expect gasoline prices to drift lower over the next several weeks.
The AI Stack
U.S. hyper scalers will invest $800 billion on AI this year and $1.1-1.2 trillion next year. That means tremendous demand for Nvidia’s chips as well as Micron’s memory semiconductors. The entire AI stack is extremely attractive. The companies in the AI food chain are looking at five years plus of strong earnings and revenue growth.
Micron, SK Hynix and Samsung
The hyper scalers are negotiating long term contracts for memory chips. For the next five to ten years and maybe longer, memory chip prices will be strong. The boom bust days of the memory chip industry are over.
SK Hynix is flooded with unprecedented offers from Big Tech to secure chip supplies. See X
Micron is trading for 9 times earnings for the next four quarters. The stock remains a strong buy. My price target on Micron is $1,000, up another 40% from current levels.
https://www.barrons.com/articles/memory-micron-sandisk-ai-stock-price-c1377e52
TSMC
The company says April revenues for AI related semiconductors were strong. https://www.bloomberg.com/news/articles/2026-05-08/tsmc-sales-grow-17-5-on-extended-ai-buildout-boom
Intel
Apple and Intel have a preliminary agreement for Intel to manufacture chips for Apple. This is a major step forward for Intel but I remain skeptical principally because of valuation. But if you own it, keep it.
https://www.wsj.com/tech/apple-intel-have-reached-preliminary-chip-making-agreement-69eb9370
Gold and Silver
The two precious metals are starting to move higher. A deal to reopen the Strait would be very positive for the metals and risk assets more generally. I continue to focus on CDE and NEM. I bought more CDE today.
Rheinmetall
JP Morgan downgraded the stock. I think the analyst is wrong. Germany and other countries in Europe will be spending significantly more on their militaries through the end of the decade.
Economics
The U.S. economy is in good shape. The April employment report showed job growth of 115,000. The market was anticipating a jobs increase of around 50,000. Wage growth was 0.2% for the month and 3.6% for the last 12 months. With wage increases of 3.6%, inflation will NOT become embedded in the economy. Lower income households will reduce purchases of non essential goods and services in order to pay for elevated gasoline prices.
https://www.nytimes.com/live/2026/05/08/business/jobs-report-economy
Used car prices are down 1.6% for the month of April according to Cox Auto Research. Over the past 12 months used car prices are up 1.8%.
Politics
In a huge blow to efforts by the Democratic Party to gain a majority in the House of Representatives at the upcoming midterms, the Virginia Supreme Court struck down a measure allowing state Democrats to redraw congressional districts. The state’s highest court said that the Democratic effort violated the state constitution by irreparably undermining the state’s referendum process.
https://www.nytimes.com/2026/05/08/us/politics/virginia-redistricting-supreme-court.html
The International Trade Court of the United States ruled that Trump’s 10% across the board tariffs to address a balance of payments crisis is illegal. The Trade Court said that there is no balance of payments crisis as that term is used in Section 122 of 1974 Trade Act.
https://www.nytimes.com/2026/05/07/business/economy/trump-global-tariff-ruled-illegal.html
Healthcare Hantavirus
Human transmission of the Hantavirus is extremely rare.
Most hantavirus infections occur when people inhale tiny particles contaminated with the urine, droppings, or saliva of infected rodents, especially deer mice in North America.