So, we have a week of new records. Every day, the S&P 500 continues to rise, setting one all-time record after another. According to Bank of America, institutional investors continue to sell, this is the 10th week out of the last 11 that they have been selling, and retail investors have been buying eagerly for 30 weeks out of the last 32. Companies are actively helping the latter by buying back their own shares. So much for the demand structure! This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
What’s driving the market up, besides retail investor greed and execs eager to cash in on stock options?
Honestly, it’s hard to say. Maybe investors are simply hypnotized by the “great” accomplishments Trump bragged about during his first six months. More likely — it’s momentum. As one investor joked: “They’re buying because the market is rising, and it’s rising because they’re buying.”
One potential explanation — beyond Trump’s greatness — is the surge in the U.S. money supply. In June, M2 grew by 4.5%, the largest monthly increase since July 2022, and it’s been rising for 20 straight months. More money, more market juice!
Greed has reached extremes, and meme-mania is back. New hype stocks emerge daily. If the old stars were GameStop and AMC, now it’s Opendoor, Kohl’s, Krispy Kreme. Low (or zero) trading fees and easy mobile access turned markets into casinos. Reading Graham’s “Intelligent Investor” now seems as outdated as using a rotary phone.
On the earnings front, the stars were Alphabet and Tesla. Alphabet crushed expectations on revenue and profit and announced an extra $10B in capex — AI doesn’t come cheap. Investors applauded with a rally. Tesla, on the other hand, missed on both top and bottom lines. Musk warned of rough quarters ahead as EV tax credits phase out — likely pushing Tesla’s cash flow negative. A struggling business in a booming sector? That’s not exciting. Tesla shares dropped over 8%.
Of course, Trump made headlines again. This week, he visited the new Fed building — after accusing Powell of blowing billions on “Big Construction.” Wearing a pristine hard hat (missing MAGA branding, oddly), he waved a slip of paper and claimed costs ballooned to $3.1B. Powell calmly responded that Trump was wrong: the figure included a separate building completed years ago. A rare public moment of fact-checking Trump — gutsy move, Jerome! So, don’t expect rate cuts just because Trump’s shouting. The Fed will act when data supports it.
Bottom line? It feels good to be on top — S&P 500 at records — but it’s tough to find solid fundamentals to justify the rally. Either keep riding the wave until the music stops, or cash out some chips and breathe. The problem is, the casino never closes — and chips are free for all.
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
