Vibe check: 80s coke parties in Miami. Or tech stocks 1999. Those are basically the same vibe.
It was a good quarter for US equities, and for global equities too. Spoiler alert: Good’s an understatement.
Barring a very poor session Tuesday, the S&P will boast its best quarterly advance since Q2 2020 and since Q2 and Q3 of 2009 before that.
Those performance comparisons jibe with the point I’ve been making about the anomalous surge in YoY index EPS growth: Corporates are growing the bottom line as if they’re lapping recession comps, and the index is rallying as if we’re coming out of a deep bear market.
Suffice to say Donald Trump’s decision to — I don’t even know what to call it anymore, “Blow some sh-t up just to say we did” is funnier, but “Snatch defeat from the jaws of victory” is probably a more accurate description of the botched coup de grâce in Iran — stir an already bubbly pot in the Mideast was insufficient to deter investors egged on by blockbuster corporate profits and semi FOMO.
Speaking of semi FOMO, my God: Micron soared 239% in Q2. That’s not too bad, is it? Absurd as that sounds, it’s the same story there as it is at the index level, which is to say there’s a fundamental underpinning.
Consider: The S&P rose 14% coming off a quarter when index profit growth was 17% (excluding write-ups at Alphabet, Amazon and Nvidia) and Micron rose 240% coming off a quarter when revenue surged 250%.
I’m not suggesting (at all) this isn’t a mania. I think it probably is. But history doesn’t repeat, it merely rhymes. Whatever this is, it ain’t the blow-off top phase of the dot-com bubble, notwithstanding whatever bears are serving today for the SpaceX joke du jour.
But — wait, let me go Trump on you: BUT!! The figure below’s a reminder that impressive as the fundamentals are, seem and look, we’re pushing the limits. The chip bonanza feels a bit like the Paul Engemann-assisted on-the-come-up montage from Scarface.
The SOX was up more than 80% in Q2 and it’s nearly doubled in 2026. Can it keep going higher? Sure. But… well, I’ll go Trump again: BUT!!
An 80% gain would count as the best quarter for the SOX ever. The bar to clear for best year ever is 101%, in 1999. That was the Icarus year for the Nasdaq 100.
As discussed here in a short piece on Monday, Micron’s expected to account for nearly a fifth of overall S&P 500 EPS growth both this year and next. That’s a ton of medium-term pressure on just one stock. Between them, Micron and Nvidia are seen accounting for more than 40% of current-quarter index profit growth. That’s a ton of near-term pressure on one industry.
That semi concentration risk is mirrored — and then some — in South Korea, where local equities are in thrall to one of modern history’s most feverish trades, exacerbated by the introduction of leveraged retail products referencing Samsung and SK Hynix. The former’s up 180% in 2026 so far, the latter 307%.
Pass me that mirror. And a straw.
In a former life, an 80s coke party and a YOLO’d PA with unrealized gains to the momentum moon would be a seductive siren-esque mistress
The 80s was all coke.
Earnings are really fantastic. They are artificially inflated though. Write ups on balance sheets and counting as earnings by publicly traded techs in their stakes in the likes of anthropic, open ai and other giant unicorn stakes. Not repeatable over time. Given this multiples need to come down, and there is major downside risk here in a correction. You can always tell enthusiasm when the market focuses on earnings and sales while disregarding cash flow and balance sheets. There is more upside but an investor really needs to review risk tolerance and their own financial situation….
A very long time ago in business school, we were taught that most startups fail because of cash flow, not because of a bad idea.
The Kospi now feels like a game of Jenga that has gone on for too long. When it topples over, it could be spectacular. Will it also lead to a tsunami here? That is another puzzle to solve.