Be kinde to folk. This changeth the whole habitat.
- Manlobbi
Personal Finance Topics / Macroeconomic Trends and Risks
No. of Recommendations: 12
https://www.wsj.com/finance/investing/from-sports-...
From Sports to AI, America Is Awash in Speculative Fever. Washington Is Egging It On.
The Fed is lowering rates, the Trump administration is loosening regulations across the financial system and Trump’s own family is cashing in
By Greg Ip, The Wall Street Journal, Oct. 16, 2025
…
The speculative fever has spread well beyond the usual stocks, bonds and property. Crypto, a brand new asset class, is now valued at some $4 trillion. Americans bet $150 billion on sports last year, up 24% from 2023, according to the American Gaming Association. Gold, a hedge against bubbles, is looking bubbly itself. Speculation has become woven into today’s political, economic and cultural psyche.
And official Washington, instead of leaning against the speculation, is egging it on: the Federal Reserve is lowering interest rates, the Trump administration is loosening regulations across the financial system, and President Trump’s own family is cashing in….
In its semiannual report on financial stability, the IMF wrote: “Risk asset prices are well above fundamentals, increasing the probability of disorderly corrections…Markets appear complacent as the ground shifts.” For an institution normally given to understatement, this is the equivalent of setting its hair on fire.
The IMF estimates the current ratio of the S&P 500 to future earnings is in the 4% highest such readings since 1990. The market is less overvalued than at the peak of the dot-com bubble in 2000, but more concentrated in a handful of companies. Meanwhile, the global lender warns that climbing government debts and worries about the U.S. dollar menace bond and currency markets….
The sorts of linkages to the financial system that made the housing bust so destructive appear absent. (That may be changing: more data centers are being financed with debt. And banks recently took big losses on the surprise failures of two finance companies, one providing subprime auto loans.)…
Today, working-class investors are flocking to all these markets: stocks, betting and crypto. They are beneficiaries of a new age of democratic finance. Or the last invitees to a party that’s going to end. [end quote]
Recessions are a regular feature of capitalist business cycles. The arrival of an ordinary recession (such as 1990) doesn’t involve a bubble and isn’t a crisis.
The bursting of a bubble can cause speculators to lose a lot of money. This has happened many times in the past without causing a financial crisis. The bursting of the dot-com bubble in 2000 caused a mild recession but not a financial crisis.
METARs who are speculating in today’s bubble can lose money but they may not crash the economy.
A financial crisis results when the bubble is financed by debt that pulls down interlocking lenders. That’s what happened in 1929 and 2008.
Removing regulations and oversight and spiking the markets with lower interest rates will only inflate the bubble more.
Wendy
No. of Recommendations: 3
Not THAT big a deal yet:
US stocks closed lower Thursday as jitters spread on Wall Street about credit market turmoil and regional banks’ exposures to bad loans.
The Dow fell 301 points, or 0.65%. The broader S&P 500 dropped by 0.63%, and the tech-heavy Nasdaq Composite moved 0.47% lower.
Volatility has returned to Wall Street amid rising US-China trade tensions, concerns about historically expensive stocks and brewing trouble in the banking industry.
Regional bank shares tumbled Thursday after two lenders disclosed issues with borrowers, stoking nerves about the health of the credit market — and the potential for negative spillovers into the stock market and broader economy.
Zions Bancorp (ZION) sank 13% after the bank disclosed it would take a $50 million loss in the third quarter because of a bad loan. Western Alliance Bancorp (WAL) dropped 10.8% after it disclosed it is suing a borrower over allegations of fraud.
“Credit quality worries are plaguing Wall Street today as fears mount that there are multiple large lenders with heavy exposure to problematic loans with limited collateral,” said José Torres, senior economist at Interactive Brokers.
The disclosures come on the heels of auto lenders First Brands and Tricolor Holdings filing for bankruptcy in September. Nerves are rising that big banks are tied up in loans that might not get repaid.
Jefferies (JEF) sank 10.6% Thursday as the bank wrestles with the fallout from having exposure to First Brands. Jefferies shares had their worst day since April and are down 25% so far this month.
“Everyone is asking is that a canary in the coal mine?” Michael Block, market strategist at Third Seven Capital, told CNN’s Matt Egan. “They’re supposed to be the smartest guys in the room.”
JPMorgan Chase CEO Jamie Dimon said on his company’s earnings call on Tuesday that he is concerned about the credit environment. JPMorgan disclosed it had a $170 million exposure to Tricolor.
“These are early signs there might be some excess out there,” Dimon said on the earnings call, “If we ever have a downturn, you’re going to see quite a bit more credit issues.”
“I look at asset prices being very high, credit spreads being very low…I’d feel more comfortable if that weren’t true because that’s a long way to fall,” Dimon said on Thursday at the annual Institute for International Finance meeting.
“And it seems to me the market kind of thinks everything’s going to be fine, and you know, I’m not quite so sure of that,” Dimon said.
Jeff
No. of Recommendations: 0
What we are seeing now is noise. Not a trend change...yet.
Wendy
No. of Recommendations: 0
Jamie Dimon,
Is seeing cockroaches. Argentina is the beginning of a contagion...as in Asian Contagion. The bond markets are worrying.
No. of Recommendations: 8
What we are seeing now is noise.
While that may be true, it seems to be deafening. I don’t remember this many people talking about “bubble” before 2008 or the dot-com era. Maybe my memory is failing me, but everywhere I turn it’s “worry worry worry”, and not from the usual places. Random commentators on CNN, late night, magazine and news articles, (these) message boards, people like Jamie, Mrs. Goofy (?!), and elsewhere.
It’s weird. All this talk, so many acknowledge it, and the market goes up.
No. of Recommendations: 0
They say the market climbs a wall of worry. Buy on the rumor, sell on the news :-)
Jeff
No. of Recommendations: 0
Something's got to give.
If you lose your seat on the Titanic, more's the shame.
