American stock market enters manic phase as euphoria replaces optimism
By
The Economist
All dough, no crust. Filling but forgettable.
Summary
The article argues that the American stock market, which has been in a bull run for years, is now entering a "manic phase" characterized by euphoria rather than just optimism. While prices and valuations have soared, the market previously avoided being labeled a bubble because it didn't feel excessively manic. However, with options markets now showing euphoria replacing optimism, and expectations of AI-driven earnings growth already fully priced in, the article suggests the market is entering a dangerous phase where unexpected returns are becoming less likely.
Key quotes
· 3 pulledFor most of the past couple of years the best argument that American stocks were not in a bubble was that things simply didn't feel manic enough.
Yes, prices had soared, and yes, valuations had risen so high that shareholders' expected future returns were looking increasingly disappointing.
Yes, the odds of unexpected returns were receding as well, with more or less everyone already convinced that corporate earnings would keep rocketing up while artificial intelligence revolutionised the economy.
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