From Bubble to Eternity
By almost all measures, US asset prices are in a bubble. Based on Cyclically Adjusted P/E ratios, the S&P 500 has been this high only one time in history — at the height of the Dot.com bubble.
Monday, April 27th, 2026
Bill Bonner, from Baltimore, Maryland
“In the post-Cold War era, while the undercurrents of US hegemony were always present, Washington at least maintained on the surface the image of a ‘responsible actor’: sustaining alliances, providing some international public goods, and leading the creation and enforcement of global rules...
“Today, that facade has rapidly fallen away. America has devolved entirely into a rule-breaker...cooperation saboteur...now relying on the naked ‘law of the jungle’ to maintain its dominance.”
—The Chinese People’s Daily
What a remarkable set of dots!
They include some of the grimmest pictures we’ve seen in years...
First are signs of growing lawlessness and corruption. New York Post:
Chaos at White House Correspondents’ Dinner as gunman storms hotel, opens fire outside ballroom and Trump is evacuated
And whenever Trump makes a policy shift....fortunes are made by insiders front-running the news. Common Dreams:
‘Mind-Blowing Corruption’: Traders Placed Massive Bets Minutes Before Trump Post on Iran
More troubling still are the signs that the US, like a grandmother in the jaws of an alligator, is being dragged into what looks more and more like an expensive quagmire...Asia Times:
America’s Iran quagmire…
As the Chicoms suggest, above, a great empire must provide ‘international public goods.’ Typically, it keeps trade routes open and safe...provides a reliable common currency...and establishes basic rules so people know what they can do and cannot do. An empire that becomes unpredictable and unreliable is probably headed for regime change of its own.
And US finances are careening to what looks like certain fiasco. Fortune:
When interest on national debt overtook military spending, it triggered a limit where the U.S. may ‘cease to be a great power,’ warns Hoover historian
But if these things are what they appear to be — signals of upcoming calamity — how come the stock market doesn’t see them? Instead, it suggests unbounded optimism. CNN:
Stocks are at record highs and shrugging off the war with Iran
By almost all measures, US asset prices are in a bubble. Based on Cyclically Adjusted P/E ratios, for example, the S&P 500 has been this high only one time in history — at the height of the Dot.com bubble. But back then, things were looking up. The US was not at war...and the feds were actually running a budget surplus.
Today, the dots tell an alarming story. But the stock market hasn’t corrected. It’s dark at one end of the tunnel...bright as day at the other. We can’t remember ever seeing such a disconnect. And the harder you look, the wider the divergence appears.
America’s blockade of Iran’s blockade is intended to break Iran’s blockade with a blockade of our own. But commuters don’t really care who is blockading them from cheaper gasoline. They need to get to work.
And the oil market affects a lot more than just the price of gasoline. Farmers report that they are unable to buy fertilizers. A lack of sulphur, for example, is causing problems all over the world. Sulphur is used in car batteries and computers...and just about everything.
Meanwhile, a Dutch airline announced that it is cancelling flights — because jet fuel is too pricey. Conde Nast Traveller:
KLM has canceled more than 150 flights over the coming month as the cost of jet fuel continues to spike.
So why hasn’t the bubble on Wall Street popped?
Maybe it’s something new...an eternal bubble? One that never pops?
Tune in tomorrow...
Regards,
Bill Bonner
Good commentary this morning. I sure don’t get this crazy market, either. Just not worth the risk. A Big Loss sure seems to me more likely than a Big Gain, or even a mediocre one. I’m only trusting Tom’s calls now.