Party Like It's 1929

In this post I am not going to discuss the status of the Iran War, Trump's other invasion ambitions beyond Iran (Cuba, Greenland, Canada), or the rampant grift and corruption taking place at levels never before seen in U.S. history. Needless to say there are those taking part in the evil. Those resisting the evil. And the vast majority of zombies who are oblivious to the risk they face in the second half of 2026: The Year of Living Dangerously.

So we go straight to the markets and economy:

This week the extreme divergence between market fantasy and economic reality widened again to an unprecedented level.

This week BofA put out their first "Sell" signal since the February top just prior to onset of the war. Therefore it would be fitting if this official sell signal coincided with the presumed end to the war. Suffice to say that global gamblers have been ignoring the war for the past eight weeks straight as indicated by the eight week win streak for S&P Tech stocks.

"Bank of America’s Bull & Bear Indicator has hit 8.0, triggering a contrarian sell signal for risk assets, but strategists led by Michael Hartnett say investors are unlikely to trim equity longs ahead of what could be a historic wave of initial public offerings"

Now jump to Bloomberg's version of the same story:

“Add mega IPOs to AI big boys and [Tech] market concentration [48%] easily surpasses bubbles of roaring ‘20s, Nifty 50 ‘70s, Japan ‘80s, TMT ‘90s...Tech currently accounts for 44% of the S&P 500."

There it is, by June 12th of this year - which is the SpaceX largest IPO in history - market concentration will reach record levels. In other words, what is deemed extremely "bullish" by most investors - massive impending IPOs - is in fact extremely bearish.

Then in the same week, we also learned that Consumer Sentiment has imploded to a new all time low.

Which completes the "K Shaped economy": Ultra wealth for the few, supported by a handful of massively overbought stocks. And rising poverty for everyone else.

One would have to be wholly delusional to believe this is a healthy setup for continued gains, and yet according to BofA there is "no rush to cut exposure" ahead of incipient meltdown.

What could cause this overbought and over-crowded house of cards to collapse?

Anything really.

Last year the entire semiconductor sector imploded due to a release of the Chinese "DeepSeek" AI model that was running at a fraction of the cost of U.S. based AI models. The implication was that in the future, AI won't require nearly as much computing power as it does currently.

Just today we learned that DeepSeek is planning to make a 75% cost reduction permanent. It's very bad timing ahead of three massive AI IPOs to put this news out.

Great timing.

Here's another similar story that broke this week indicating that the "compute" centric model is far too expensive to be profitable:

"Firms today are pushing employees to use as much AI as possible to squeeze out the technology’s productivity gains. But that pressure is leading to cracks, and those cracks may be irreparable."

“For my team, the cost of compute is far beyond the costs of the employees”

In summary, these are the new "Roaring 20's". So party like it's 1929.

"A surge in bond yields is how booms and bubbles end, according to Hartnett"

We'll be sure to keep an eye out for that.