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Michael Santoli @michaelsantoli.bsky.social · 1d

Pretty sure the entire difference is NVDA, almost 8% in QUAL, not in SPHQ

Michael Santoli @michaelsantoli.bsky.social · 1d

Obviously, SPHQ travels in a fairly narrow band relative to the S&P 500 itself, plus or minus 5%, given that the benchmark itself is skewed toward higher quality. Nonetheless...

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Michael Santoli @michaelsantoli.bsky.social · 1d

This phase of the market advance has been led by higher-volatility, lower-quality stocks. Here's the S&P 500 quality-factor ETF relative to the broad S&P 500, back to a 10-year relative-performance low.

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Michael Santoli @michaelsantoli.bsky.social · 1d

Never forget...

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Reposted by Michael Santoli

Michael Santoli @michaelsantoli.bsky.social · 3d

The bid abides.

That’s the central reality for stocks, the market bypassing plenty of excuses to falter in an often-bumpy time of year, anchoring to an entrenched story: The Fed is cutting rates into an economy supported by a huge tech capex boom and affluent-consumer spending...

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Michael Santoli @michaelsantoli.bsky.social · 3d

I filed a poor man’s copyright on that phrase 12 years ago.

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Michael Santoli @michaelsantoli.bsky.social · 3d

These are the atmospheric conditions into a new week, with a lack of government data fine for now due to that entrenched story described above. Still, would be no big surprise if something soon fouls the “immaculate rotation” dynamics (yen rally, more stress in the gamier reaches of private credit…)

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Michael Santoli @michaelsantoli.bsky.social · 3d

And, sure, valuation is a dull market-handicapping tool over short spans of time, has been rising secularly for decades, is somewhat justified by higher-quality index composition and rarely falls much with the Fed cutting and earnings rising. Still, the key indexes are at currnet cycle highs again.

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Michael Santoli @michaelsantoli.bsky.social · 3d

There’s plenty of silly speculative aggression, too, with thematic subsectors such as quantum computing, drone tech, crypto hoarders, alt/nuclear power names flying and Robinhood up 300% year-to-date. Call-option stampedes are in full sprint. So far, it’s been mostly firewalled from the core market.

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Michael Santoli @michaelsantoli.bsky.social · 3d

One early signal of more bubbly action, also cited last week, is volatility rising along with share prices. We’re seeing some of that, VIX a bit higher each day last week with the indexes hitting record. Also some tightly coiled conditions with single-stock volatility very high vs. index volability.

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Michael Santoli @michaelsantoli.bsky.social · 3d

As noted a week ago, we got a local crescendo in the “AI bubble just like 1999” vs. “AI bubble but it’s only 1996” debate. The brute force of the twelve-figures sums being promised in AI-buildout pledges is forcing the market to price in severe scarcity of chips, storage, energy. Fun while it lasts.

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Michael Santoli @michaelsantoli.bsky.social · 3d

Much of this is debatable. But in markets, story lines that help explain a market trend are hard to dislodge unless/until the market or some macro impulse forces a rethink. The idexes have churned higher on AI momentum, constant rotation giving reprieves to lagging sectors (healthcare, energy).

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Michael Santoli @michaelsantoli.bsky.social · 3d

There’s also a “reflation and reacceleration” thesis running through markets, with copper and gold rising together, forecasts for “run it hot” policies in 2026 (heavy tax-refund season), initial tariff impacts dissipating, capital markets flexing beer muscles as regulators look the other way.

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Michael Santoli @michaelsantoli.bsky.social · 3d

In this framing, the slackening labor market provides the impetus for an easier Fed but doesn‘t properly reflect a firmer underlying economic trajectory due to tighter labor supply (immigration, aging demographics) along with government layoffs, the tariff confidence shock and AI-curious employers.

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Michael Santoli @michaelsantoli.bsky.social · 3d

The bid abides.

That’s the central reality for stocks, the market bypassing plenty of excuses to falter in an often-bumpy time of year, anchoring to an entrenched story: The Fed is cutting rates into an economy supported by a huge tech capex boom and affluent-consumer spending...

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Michael Santoli @michaelsantoli.bsky.social · 3d

From a week ago, Piper Sandler analyst ballparked that 25-35% of Kalshi daily volumes were from Robinhood users following the launch of prediction trading on HOOD.

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Michael Santoli @michaelsantoli.bsky.social · 5d

No predictions here, but the last couple of times Tesla went vertical into this price zone in a buying crescendo, the Nasdaq was on the verge of a rough patch...

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Michael Santoli @michaelsantoli.bsky.social · 5d

Is this the good AI?

"I didn't want to get blood on your floor."

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Reposted by Michael Santoli

Michael Santoli @michaelsantoli.bsky.social · 11d

Wall Street is having a mild AI-nxiety attack.

The simmering unease about a possible AI bubble began boiling over last week.

A proper warning of an undisciplined capital-burning binge or a helpful dose of caution to refresh the rational exuberance?

New column.

www.cnbc.com/2025/09/27/s...

How to know when it's time to worry about the AI bubble

Wall Street is undergoing a minor AI-nxiety attack.

www.cnbc.com

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Michael Santoli @michaelsantoli.bsky.social · 11d

Taking it back to now, there's obviously a reservoir of skepticism about valuations, viability of AI business models, redundant buildouts, etc., that can easily make this just an interim, refreshing cooling-off moment.

Like a glass of water between every drink at the bar, this can prolong the fun.

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Michael Santoli @michaelsantoli.bsky.social · 11d

Sort of. "Amazon fell 90% and was almost broke and is now worth $2T" became aspirational at some point.

I recall a big WSJ feature then on EMC's dominance, quoted a corporate CIO telling them, "I hate you guys. I wish we could stop buying your stuff but we can't." Swap in NVDA or ORCL here.

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Michael Santoli @michaelsantoli.bsky.social · 11d

There were graybeards during the post-Netscape boom talking the space-tech/mainframe mania of the '60s and the Nifty Fifty dominance that followed. But in most respects, the post-'95 run took everyone by surprise in character and magnitude.

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Michael Santoli @michaelsantoli.bsky.social · 11d

One thing we didn't have in the '90s? A neat little template of a prior tech bubble from three decades earlier that some investors treated as happy destiny and others as the map to hell. This is serving to scare some cautious types while giving ammo to others to keep claiming "it's still early."

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Michael Santoli @michaelsantoli.bsky.social · 11d

Bubbles are rare, extreme, often misdiagnosed. Not the same as "stocks seem rich and should correct." We had no bubble before any of the four 20%-ish market drops since 2018.

Many trying to guess the date on the curve between 1995-2000 that corresponds with now, though no such rerun is guaranteed.

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Michael Santoli @michaelsantoli.bsky.social · 11d

Wall Street is having a mild AI-nxiety attack.

The simmering unease about a possible AI bubble began boiling over last week.

A proper warning of an undisciplined capital-burning binge or a helpful dose of caution to refresh the rational exuberance?

New column.

www.cnbc.com/2025/09/27/s...

How to know when it's time to worry about the AI bubble

Wall Street is undergoing a minor AI-nxiety attack.

www.cnbc.com

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