Stocks closed higher yesterday on easing Middle East tensions.

The Nasdaq 100 made yet another new all-time high (second one this week), while the broader Nasdaq Composite is less than two-tenths of a percent away from making a new all-time high of their own.

It should come as no surprise that the tech-heavy Nasdaq is leading the way. Although, the S&P has a fair share of tech stocks as well, and is just one-tenth of a percent away from making a new all-time high.

The underlying impetus for the rally, however, is simply a resilient economy, a strong labor market, with easing inflation.

The Fed said as much just last week in their latest FOMC Announcement. In fact, Fed Chair Jerome Powell said that "despite elevated uncertainty, the economy is in a solid position, the unemployment rate remains low, and the labor market is at or near maximum employment." Moreover, they are still expecting 2 rate cuts this year, which shows they don't seem all that worried about rising inflation (aside from a modest increase).

They point to uncertainty surrounding tariffs. But so far, none of that has showed up in any of the numbers. Quite the opposite. Inflation has come down over the last three months.

We'll get another look at inflation this morning with the Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge. Headline inflation is expected to come in at 0.1% m/m vs. last month's 0.1%. The y/y rate is expected to tick up to 2.3% vs. last month's 2.1%. The core rate (ex-food & energy) is forecast at 0.1%, also in line with last month's pace. The y/y rate is expected to tick up to 2.6% vs. last month's 2.5%.

While this is expected to show a modest increase, the core rate remains below where it was just a few months ago when it was at 3%. The goes for the latest CPI (currently at 2.8% vs. 3.3% several months back), and the PPI (which is currently at 3.0% vs. 3.6% a few months ago).

It's been a while since I mentioned my outlook for another 20% gain this year, as well as next year, and the year after that. So let me reiterate that again.

In short, the tech-boom we saw back in 1995 to 1999 (which was led by the internet and dot com companies) saw 5 glorious years of double-digit, back-to-back gains. In '95 the S&P was up 34.1%; 1996 was up 20.3%; 1997 was up 31.0%; 1998 was up 26.7%; and 1999 was up 19.5%. That accounted for a 220% increase over that time span.

The parallel, once again, is a tech-boom. But this time it's being led by AI. And I expect a multi-year rally (5 or more years) of 20%+ gains per year. And we are off to a great start. In 2023, we were up 24.2%. In 2024 we were up 23.3%. It's rare to see 2 years in a row of 20% gains. Last time was '95-'96. But when it happens, it's usually because of some significant reason, leading to even more gains to follow. And I'm expecting another 3 more years of this, including this year.

AI is expected to transform virtually every industry in some way shape or form as well as impact ordinary lives.

And the AI rally that I'm expecting to continue for years to come, has the potential to transform one's portfolio.

So, make sure you're taking full advantage of it.

Best,