Bubbles, Shrugged

There’s a headline making the rounds today that basically says: America is great at building stock bubbles and then just… walking them off. Which, fair. Run the tape on the last month. IBM’s worst day since 1987. SpaceX losing its trillionaire and then its IPO price. Two separate weeks of chip stocks getting clobbered. Meta’s cash flow scare. And now Leopold Aschenbrenner’s fund down 67% in July, apparently days before his own wedding — which is either terrible timing or a very specific kind of poetic. Each of those looked, for about a news cycle, like the crack. None of them were. The index just kept doing its thing.

The generous read is that this is a market efficiently pricing individual mistakes without letting them contaminate everything else — diversification working as advertised. The less generous read is that none of these have been the same mistake yet. Jim Paulsen’s out today naming two separate threats to the AI capex trade, and the thing that would actually matter is if those threats turn out to be one threat wearing two costumes — because a market that shrugs off five unrelated blowups is not the same market that shrugs off five correlated ones.

Meanwhile OPEC just finished unwinding its 2023 cuts, adding supply for a sixth straight month, into a summer where the Iran war was supposedly the reason oil justified $100. If the cartel actually believed the war was a production constraint, would it be selling into it this eagerly? The oil market’s fear and the oil market’s supplier seem to be reading two different stories.