The market, like Ozzy Osbourne’s “Crazy Train,” is barreling ahead at full speed, smashing through all-time highs. Investors who didn’t board early are now scrambling to jump on — grabbing railings, climbing onto footboards, anything to not be left behind. It’s as if geopolitical tensions vanished, trade wars ended gloriously for the U.S., budget deficits and debt are no longer issues, valuations are cheap, the economy is booming, rates are about to be slashed, and risk simply ceased to exist. Time to pinch ourselves — is this a dream or a fairy tale? Or are we about to wake up to a rude reality check? This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
Unlikely the world became safer just because the U.S. Air Force pulled off a logistically impressive bombing of Iran’s nuclear sites. Critics say it was more smoke and fire than impact — the nukes survived, and the ayatollahs aren’t exactly crying. And let’s not forget China hasn’t had its say yet — and make no mistake, the conflicts with Russia, North Korea, Iran, and others are all part of one bigger fight: with China.
The U.S. economy is cooling: Q1 GDP contracted 0.5% year-on-year — the first quarterly decline in three years. Debt surpassed $37 trillion and continues to rise, while the budget gap widened 7% year-over-year. The trade war is ongoing, despite Trump’s surprise “deal” with China — a “tremendous” agreement with no details shared. Other trade talks are dragging, and July 9 looms as the deadline for tariff deferrals.
Inflation is far from defeated. With import-heavy U.S. consumption and a weakening dollar, rising prices are almost guaranteed. Tariffs will only add fuel. The Fed remains firm — Powell told Congress they’re in “a good position to wait,” warning tariffs could dampen growth and lift prices. While a couple of governors hinted at rate cuts, nearly a dozen officials — including Powell, Williams, and Daly — quickly shut that idea down.
Equity valuations are frothy: the S&P 500 P/E ratio is well above historical norms, topped only during the dot-com bubble. Buffett’s favorite metric — total market cap to GDP — just hit 203%, more than double its long-term average. Not cheap, folks.
So, most of the risks that terrified investors two months ago? Still here — some even worse. But does it matter? Not to the market. The crazy train is flying, and investors are leaping aboard at any cost. “I’m going off the rails on a crazy train,” Ozzy might scream. Maybe it’s time we all listened to Black Sabbath again.
*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.
