Key insights
- The author expresses concern over the market's apparent indifference to significant headwinds, including geopolitical conflict impacting oil supply, inflation, weakening job market, and questionable AI investments. This disconnect between fundamental risks and market behavior suggests potential overvaluation and increased vulnerability to negative shocks, posing a bearish outlook for US equities.
A war that has cut off around 20% of the world’s oil supply and caused infrastructure damage that will continue to affect supply even after the conflict ends. An uncertain political climate with tariffs appearing and disappearing. A weakening job market, falling consumer demand, and inflation numbers bigger than expected. Increasing liabilities taken on to fund AI-related capex that seems to be much less useful then anticipated.
And yet the market doesn’t seem particularly bothered. Have we all just agreed to put our hands over our ears and shout “lalalalala”?