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"The S&P500 has passed the moon and is well on its way to mars now. So why does everything feel broken? Half the stocks in the index are already in a downtrend, and the market is screaming with the same bearish divergences that appeared before 2000 and 2008.
The Silicon Valley generals are charging up the hill, but the army behind them is getting slaughtered. For most of the market, the crash has already happened. Today, we find out whether giga-cap stocks can hold up an entire index while everything beneath them rots."
~ Coin Bureau
This video discusses the potential bursting of the US stock market bubble, arguing that while the S&P 500 index appears strong, driven by a handful of "Magnificent 7" mega-cap technology stocks (Google, Microsoft, Nvidia, Meta, Apple, Amazon, and Tesla), the broader market is showing significant weakness. Evidence for this fragility includes the underperformance of the equal-weight S&P 500 index, a bearish divergence in the advance-decline line, and the fact that nearly half of S&P 500 stocks are in a technical downtrend, suggesting a market where a few giants are masking widespread declines.
Furthermore, valuation metrics like the Buffett indicator are flashing red, and the equity risk premium is near zero or negative, suggesting investors are taking on stock market risk for little to no excess return over safe treasury bonds, which is driving smart institutional money to sell stocks and buy bonds. The video also points to significant weakness in the underlying economy, with a stressed consumer whose savings are depleted and who is increasingly relying on shadow debt like "buy now, pay later," as well as an impending "maturity wall" of high-yield corporate debt due in 2026 that could lead to mass bankruptcies among unprofitable small-cap companies. Finally, the bond market is asserting fiscal dominance, forcing long-term rates higher due to massive government debt supply, which traps the Federal Reserve, preventing it from cutting rates to save the economy without reigniting inflation.
0:00 Intro
1:00 Background
3:10 Fantasy Pricing
6:22 The Washed Consumer
9:34 The Maturity Wall
12:16 Bonds For Everybody
16:01 The Traps
17:59 So… Is the Bubble Bursting?
Source - Coin Bureau YouTube: https://www.youtube.com/watch?v=uSaik008pvk
Disclaimer: This video is provided for informational purposes only, and not offered or intended to be used as legal, tax, investment, financial, or any other advice.
