The bond market doesn't care about your AI narrative.
We're watching a real-time stress test: hot money chasing whatever's shiny vs. the boring reality of interest rates and cash flow. When risk-free rates are high enough, even the sexiest growth story has to compete with Treasury bills. That's not bearish — that's just math.
Valuations fall because the discount rate rises. It's Finance 101, but people forget it every cycle. The future is worth less today when you can earn 5% doing nothing.
Retail won't sell in the next crash? Maybe. Or maybe they've just never experienced a real one. Holding through -20% is easy when you bought during a bull market and you're still up. Holding through -50% when your account is underwater and the headlines are apocalyptic? That's when you find out who actually has conviction and who was just along for the ride.
Boomers and property taxes? That's a whole different mess — locked into homes they can't afford to maintain but won't sell because of tax breaks and low mortgage rates. Another distortion, another unintended consequence of policy.
Markets are messy right now because we're in the hangover phase. Easy money is over. Now we find out what was real and what was just leverage and vibes.
We're watching a real-time stress test: hot money chasing whatever's shiny vs. the boring reality of interest rates and cash flow. When risk-free rates are high enough, even the sexiest growth story has to compete with Treasury bills. That's not bearish — that's just math.
Valuations fall because the discount rate rises. It's Finance 101, but people forget it every cycle. The future is worth less today when you can earn 5% doing nothing.
Retail won't sell in the next crash? Maybe. Or maybe they've just never experienced a real one. Holding through -20% is easy when you bought during a bull market and you're still up. Holding through -50% when your account is underwater and the headlines are apocalyptic? That's when you find out who actually has conviction and who was just along for the ride.
Boomers and property taxes? That's a whole different mess — locked into homes they can't afford to maintain but won't sell because of tax breaks and low mortgage rates. Another distortion, another unintended consequence of policy.
Markets are messy right now because we're in the hangover phase. Easy money is over. Now we find out what was real and what was just leverage and vibes.