Well, the first full week of Q2 is over. The S&P 500 closed at an ATH of 4,128.80. The indexes really move when those large-cap names experience price appreciation. AMZN’s stock had a great day as the vote for unionization in Alabama came down in the company’s favor. Apple and Microsoft were up 2% and 1% respectively today. Despite the leadership of Growth/Defensive names in the beginning of Q2, we are not changing our call that we think the leadership baton, in terms of alpha, will soon be passed back to the Epicenter and cyclical names that are on the verge of meeting the greatest economic boom in living memory with ultra-streamlined business models.

Bitcoin roughly doubled in value over the quarter. Coinbase is now officially the most profitable exchange ever. So, for those of you who feel like you missed out on Growth stocks, we have something for you to find alpha in. My colleague Tom Lee said at an international Bitcoin conference in Istanbul right before the pandemic changed all of our collective lives that once the market-cap for crypto-currency reached about $2 trillion, or approximately 1% of investable assets that institutional adoption and capital would begin occurring at an exponential pace and lead to rapid and astronomical price appreciation. The good news is we just hit $2 trillion and we believe there is plenty of alpha left for those willing to brave the risks of crypto. A Newsweek article this week posed the question, “Is Bitcoin Too Big Too Fail?” Boy, that’s certainly a change of tune from “Is Bitcoin a Ponzi scheme?” Crypto is here to stay and we want to help those astronomical returns you’ve been reading about create wealth for you. If you haven’t started learning about crypto, now is the time.

We understand a lot of people are worried about something and that the world has changed rapidly. There’s still a lot of fear as we enter the first Spring after one of the most significant events in global history that led to millions of people losing their lives. Markets are up so much since the lows they reached during the depths of pandemic-induced fear. How could they possibly go up more? Well, they could go up if there was a blowout earnings season. We think some of the upside surprises for cyclical and Epicenter names will start to become evident in the fast approaching earnings season.

It seems every day that someone is highlighting some special indicator that is showing how overstretched valuations are and that a nasty market crash is imminent. Well, we don’t think it makes much sense that the market would crash on the eve of what are predicted to be the highest rates of economic growth in nearly half a century.

S&P 500 Ends Week at All-Time High, QQQ Leads Gains

Here’s the problem though. The type of forced liquidations and rapid price drops that bubble-spotters love to foretell typically don’t happen when there’s epic amounts of dry powder on the sidelines. We think that the recent flight to Growth/Defensive will be short lived and we think the earnings performance of Epicenter stocks as the economy re-opens will attract more and more capital to them. Volatility is at the lowest levels since the pandemic began. My colleague, Tom Lee, will also discuss in his note below that, if we were on the verge of an impending correction, we would likely see evidence of that materializing in credit. Instead, we are seeing the exact opposite in credit markets.

As we’ve been repeating in these pages the situation we are in does not lend itself very well to analysis based on historical correlations in economic cycles dominated by endogenous factors. What we are entering is a period that resembles the post-war rebuilding and in that environment the smokestack, cyclical, old-economy names grow at rates higher than the rest of the economy, not the technology high fliers.

Economists now expect the second quarter growth rates to be as high as 10%. The year of 2021 may see an annual growth rate as high as 7%. To put this into perspective, prior to what just happened a 3% GDP growth rate would have been considered incredibly high. Bank of America’s credit card data showed an enormous 67% surge in card spending over the past week as consumers use their unemployment and stimulus.

Last week’s better than expected jobs data and other datapoints from around the economy are simply contradicting the assertion that economic momentum has peaked. If you’re trading like the best is not yet to come, you may want to reconsider based on what’s on the horizon. If you want to brag about being first into a ‘Growth’ name that now seems obvious to everyone as a good investment than keep chasing TAM projections and the next disruptive technology. We think there will always be time to pick out amazing stocks and companies that are changing our lives with innovation and entrepreneurship. However, a lot of old-fashioned companies are meeting a unique moment in history where they are as efficient and streamlined as they’ve ever been and they’re going to meet unprecedented demand for what they’re selling. These top and bottom-line tailwinds rarely occur more than once in a lifetime. Don’t miss it trying to be the smartest guy in the room.

Last week Jamie Dimon, a guy who actually is probably often the smartest guy in the room, said as much. The scale and scope of the economic boom we’re approaching is greater than consensus is currently accounting for. The man who is the CEO of America’s largest bank has a pretty good perch upon which to opine on the US economy. Here’s what he said below. We agree.

“I have little doubt that with excess, savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the US economy will likely boom. This boom could easily run into 2023 because all the spending could extend well into 2023,’ said Dimon.

In such an environment, we are big believers that Wall Street analysis which is largely based on historical data is almost by definition liable to underestimate the scale of the boom coming because there is no recent historical precedent. Make sure you take the time to do a little ‘Spring Cleaning’ of your portfolio if it’s too heavily weighted for growth names. We happen to have just updated our key Epicenter stock lists for the occasion.

Epicenter Power Trifecta 35 List

Epicenter- Stocks With Uncommon Value During Uncommon Times

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