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Alright, let's get one thing straight: this whole AI-driven market rally? It's a freakin'... Alright, let's get one thing straight: this whole AI-driven market rally? It's a freakin' mirage. We're all being sold a bill of goods, and the S&P 493 is Exhibit A.
The "Magnificent Seven" and the Market's Dirty Secret
So, the S&P 500 is up, what, 12%? Big deal. Scratch the surface, and you find out it's all smoke and mirrors. It's the "Magnificent Seven"—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—hogging all the glory. The Washington Post says the S&P 493, the other 493 companies, are "mostly lower-tech and smaller in scale." Translation: they're the actual economy, and they're not doing so hot. AI-driven rally splits US market as S&P 493 lags behind giants
Sales slowdowns, investment pullbacks... sounds like a recession to me. But hey, who cares about reality when you can pump up a few tech stocks with AI hype and call it a boom?
Mark Zandi from Moody's Analytics is talking about "AI tailwinds" and "deglobalization headwinds." Okay, professor, but can we get real for a second? The "tailwinds" are pure speculation, and the headwinds are already here, crushing small businesses. It's like saying a guy jumping off a building has a "tailwind" because he might land in a bouncy castle.
Nvidia's 1000% Surge: A Warning Sign?
Nvidia's stock is up, like, a gazillion percent. Palantir, Micron, Vertiv... they're all soaring. Meanwhile, the Russell 2000, which tracks small-cap stocks, is in the toilet. Down 4.5%. Does anyone else see the disconnect here? It's like watching a few lottery winners celebrate while everyone else gets evicted.
Tariffs, high-interest rates... yeah, yeah, the experts have their reasons. But let's not forget the real reason: investors are sheep. They see "AI," they throw money at it, and they don't care who gets trampled in the process. Small caps can't absorb higher prices and don't have the flexibility to shift supply chains? Well tough.
And speaking of experts, Torsten Slok from Apollo says the S&P 500 is basically an "AI index" now. K-shaped economy can also be found in S&P 500, says Apollo, with Magnificent 7 the winners One-third of the index is concentrated in seven corporations? So much for diversification. It's all in on AI, all the time.
I'm not an economist, but even I can see that this is unsustainable. We're building a house of cards on a foundation of silicon and hype. And when that house collapses... well, hold on to your butts.
Offcourse, maybe I'm just being a grumpy old cynic. Maybe AI will save us all. Maybe these tech giants will bring about a new era of prosperity. Maybe pigs will fly.
The Coming Crash?
Michael Burry—yeah, the "Big Short" guy—is calling out the AI industry for "exaggerating its long-term profitability." And what happens when the hype dies down? The Nasdaq's already down 7% from its peak. A mild pullback, they call it. I call it the beginning of the end.
And here's the kicker: all this "growth" is based on the "wealth effect." Rich people's stock portfolios go up, so they spend more money. But what happens when their portfolios tank? Consumer spending dries up, and the whole damn economy grinds to a halt. It's a fragile system, folks. A house of cards built on the delusions of grandeur and cheap money.
Slok warns that consumers and corporations are in a "very vulnerable position if the AI narrative wobbles." Ain't that the truth. The s&p 493...the s&p 493 etf...the s&p 493 index...the s&p 493 chart...what is the s&p 493? It's the canary in the coal mine.