This is something I really hadn’t thought about although it is obvious when someone – in this case highly respected trader Paul Tudor Jones – points it out.
“We’re clearly so leveraged in equities in this country. We’re 252% of stock market cap to GDP. In 1929, we were at 65%. In 1987, about 85%. In 2000, we got to 170%. And now we’re at 252.”
“If you think about the periodicity of significant bear markets since 1970, we get a mean reversion about every ten years. That would be a 30 to 35% decline. Well, 35% on 250% of GDP is 89% of GDP. The reverse wealth effect, oh my gosh. 10% of our tax revenues are capital gains; they go to zero.”
To say nothing of the pain delivered to folks who haven’t seen a real bear market.
The stock market is making new highs while the economy is making new lows.
Source: University of Michigan
The Buffett Indicator for March set a new all-time record.
There was a spectacular rally in stocks last night as Trump announced a ceasefire with the Iranian terrorists.
Since 2003, SPY has opened above both its 50 and 200 DMA while closing below both the day prior just three other times ..
Those three periods saw immediate declines of -13%, -16%, and -13% over the next few weeks.”
FWIW Carl Quintanilla on X
Extract from “Minneapolis Headlines” by Nightingale Associates on X.
Actual Sales
Ameriprise Financial Center $6.25M vs $200M in 2016 ↓97%
Wells Fargo Center $85M vs $314M in 2019 ↓73%
Forum $6.5M vs $73.7M in 2019 ↓91%
Kickernick $3.79M vs $19.15M in 2017 ↓80%
Lumber Exchange $1 vs $24.3M in 2019 ↓99+%
TractorWorks $25.5M vs $54.8M in 2014 ↓53%
One of the truisms of Silicon Valley is that it is nearly impossible to have a second idea. Steve Jobs managed it for Apple, but it is rare and the Valley is littered with the burnt-out shells of companies that shone brilliantly for a while.
A case in point is Meta. Founder/CEO Zuckerberg decided that virtual reality was the second idea that would eventually replace Facebook, and even renamed the company to suit. It flopped. Fortunately old Facebook kept soldiering on, providing the cash Zuck needed. He has now, apparently, decided that AGI, human-level machine intelligence, is the second idea. The rumor is that he intends to cut Meta’s staff by 20% in order to free up funds for the staggeringly large capital investment required by hyperscaled “AI”. Will he manage to kill the golden goose in his quest for a second idea?
Yann LeCun is a Turing award winner (the Turing award is considered the “Nobel Prize” of computing) who ran Meta’s AI Research Lab from 2013 to 2025. In 2025, LeCun left Meta, suggesting that he decided Meta is going in the wrong direction as it pursues a goal of AGI. It seems he and Mark Zuckerberg disagreed as to whether or not the path Zuck wanted to follow – hyperscaling – would lead to AGI. Zuckerberg believed it would. LeCun believed it would not. I suspect that LeCun has a pretty good understanding of the mathematical limitations of digital computers. On the other hand Zuck’s track record as a seer does not impress.
There’s a story about Henry Ford that is apposite. One day he happened to greet a visitor to his office some distance from it, in a corridor. As they walked towards Henry’s office, the visitor observed offices whose occupants were engaged in various odd practices, such as staring out of the window or at the ceiling. Finally the visitor blurted out, “Mr. Ford, what are these men doing? They don’t seem to be working.” Henry replied, “Oh, these are men who have had at least one very good idea. So I let them spend their days as they wish in the hope that they will have another one.”
Note that this latter is a log scale chart. Valuation well in excess of notorious 1929.
If Tesla’s future is the robotaxi business it needs to be more reliable.
It is perhaps too obvious to be mentioned, but the war effort to unseat the Islamic terrorists from Iran is costing a great deal of money.
Since government spending is included in GDP (why? government produces nothing, it only consumes) there will be a significant boost to the same in coming reports.
However this increase in demand unbalanced by any production will inevitably result in higher prices. Money will be created. Interest rates will rise. Pressure on consumers other than the elites will increase. Now will be the summer of our discontent.
In the times when the only way to contact a broker at a distant exchange was to send a wire (telegram), the retail customer could participate by betting on stock prices at a bucket shop. The bucket shop would have a stock ticker, an electro-mechanical device, connected by wire to a stock exchange, which printed prices on a continuous paper tape. There would also be an employee reading and calling out the prices to the customers sitting or standing around, often also another employee who would maintain a chalkboard of most recent prices.
From Wikipedia:
“A bucket shop is a business that allows gambling based on the prices of stocks or commodities. A 1906 U.S. Supreme Court ruling defined a bucket shop as “an establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in”.[1]
Bucket shops were found in many large American cities from the mid-1800s but the practice was eventually ruled illegal and largely disappeared by the 1920s.
The term originated from England in the 1820s, when street children drained the beer and liquor kegs that were discarded from public houses. The children sold the alcohol to unlicensed bars, where it was mixed together and sold to unwary patrons. These bars became known as “bucket shops.” The idea was transferred to illegal brokers who sought to profit from trading activity that was too small or disreputable for legitimate brokers”
The introduction of zero day options, that is options expiring on the close of trading every day has essentially reincarnated the bucket shop. Now the majority of options trading volume is in these options, known as 0DTE options. For a small amount you can place a bet that can potentially gain large profits.
No wonder that speculation is rampant and fundamentals mean little when the trader’s time horizon only extends as far as 4pm ET.
Financial Reality 
You must be logged in to post a comment.