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Stock Bubble Is ‘Self-Fulfilling Catalyst’ For American Exceptionalism
Here's a chicken-egg quandary for you: Which came first, US macro exceptionalism or US equity except
What happens? Trump implodes cartoonishly. First POTUS ever to self-combust. But not before he arrests Powell.
What if people stop spending? Balance sheet recession? Very tactical, but looking forward, my average worker bee friends are not spending, instead, saving for major financial disruption under DT. Talked to 3 construction locals, all 3 said their pipe line was short – roofer, 2 GCs. Yes, local CA and insignificant breadth of data.
Asset inflation and tax cuts for the wealthy; regressive taxes and inflation for the poors. Will the gains from the wealthy encourage enough consumption to offset the reduced consumption from the poors when their expenses shoot up?
Also, I was reading the weekly and saw the percent predicting a hard landing is 5%. A hard landing isn’t my base case, but I’d bet heavily on the hard landing if you give me 20:1 odds. Aren’t these tariffs supposed to kick in February 1? Tax cuts seem like they are still a long way off. Trump is too busy going after immigrants, stripping aid from poor people in third-world countries, and tilting at windmills.
Everywhere in the world people still keep putting their monthly paychecks in US ETFs causing this virtuous cycle to continue. Track record of US has been better than Europe and EM. Also a lot of investors that started in the last 10 years don’t remember a time when stocks didn’t go up every 2-year period. It will take a lot to suddenly reverse those trends. Maybe Trump can do it if he screws up very properly somewhere, but by now i think it’s really difficult to break this habit.
If/when it does, and then the downtuen needs to persist for a serious amount of time as well (not like Covid or 2022 which both reinforced the btfd mentality), it will be tough for many. But for now there is still way too much dumb money chasing AI stocks, bitcoin, memecoins and what not.
Would be interested to see how the betting market has grown compared to the stock market over the last 15 years as well. Wouldn’t be surprised if the trend is similar. Free money during Covid messed up a lot of people’s relationship with it.
“Would be interested to see how the betting market has grown compared to the stock market over the last 15 years as well. Wouldn’t be surprised if the trend is similar.”
Great points JK.
News re. DeepSeek may upset the market properly as well. Those USD 100bn+ investments by MSFT, Meta, Stargate, etc., may depreciate rather fast. This hedge fund manager burns USD 6m to develop a disruptive AI model and can subsequently use his USD 8 bn hedge fund to trade off of the disruption.