The Crack Up Boom And Bust

In late 2025 Bitcoin crashed. In early 2026, gold and silver crashed. In July of this year semiconductor AI stocks crashed. Now global bonds are crashing. The only thing that hasn't crashed are the major stock market indices.

AI is manipulating markets. What I mean, is that in addition to the AI market cap dominance in major indices, there is ongoing market manipulation using futures and options to keep the major indices pinned to all time highs. The goal of which is to complete the largest IPO in history - the impending Anthropic IPO due in November. How do we know market manipulation is taking place? Because this is the same sequence of events we saw during the early summer: Recall that AI (semiconductor) stocks had their best quarterly rally in history leading up to the June SpaceX IPO - which at the time was the largest IPO in history. Then the AI sector crashed along with SpaceX. Now they are both making a second lower high ahead of the Anthropic IPO. Clearly, Wall Street wants the speculative spirits to continue flowing ahead of the largest IPO in history which will equal $2 trillion of market cap and $100 billion of stock issuance.

Another indicator of market manipulation is the fact breadth continues to implode as I wrote about in my last blog post. It means that the rally is supported by fewer and fewer stocks. It's a clear indication of index manipulation using the futures market. In the chart below, see that NYSE breadth is now worse than it was at the March Iran war lows. Which seems impossible until we consider that Nvidia has larger market cap than the entire Russell 2000 small cap index.

What it all means is that the reversal from all time highs will be very sharp and brutal. The "AI" logic that is being used to artificially inflate markets to the benefit of AI IPOs, has never been system tested under extreme selling conditions, so in a market where almost half of all stocks are already in a bear market, there will be nowhere to hide.

"Nearly half of the stocks in the S&P 500 are in bear-market territory.

By some measures, the number of stocks helping to drive the S&P 500 higher hasn't been this low since around the peak of the dot-com bubble"

But what is really scary right now is the collapse of the global bond market. By any account, everything Trump has done so far in this second term has been bad for the bond market. First off he and the GOP Congress passed their "Big Beautiful Bill" that included a massive tax cut and which blew out the deficit record wide. That was back in July 2025. Then also in 2025, Trump put massive tariffs on the entire world which drastically increased inflation for the middle class, but then those tariffs were over-turned by the Surpreme Court in early 2026 which meant that the government had to pay refunds to corporations, further blowing up the deficit. However prices never came DOWN, so corporations just pocketed a massive windfall gain paid for TWICE by taxpayers. Then of course came the Iran war which has doubled gasoline and diesel prices year to date. The only factor weighing on credit markets that is not really in Trump's control is AI which has brought massive debt and equity issuance market in 2026, further driving global bond yields higher. AI also has an inflationary effect on commodity and utility prices which is feeding back into inflation.

What's important to note is that none of these factors are going away any time soon. Trump has been ratcheting up an all new more brutal trade war with Canada these past several weeks. The Iran war continues to drag on while global oil and gas reserves collapse. And the AI industry is barrelling ahead with their over-crowded mass extinction bubble, while ignoring all warning signs.

The AI bubble is attending this oil shock similar to how the housing bubble attended the 2008 oil shock.

In summary, bond markets will continue to crash until something breaks that's large enough to create a cascading global asset crash, which will in turn force central banks to reverse tightening.

Which means that stocks (AI) and bonds are now locked in a zero sum game: