Keep on Truckin’

We’re all richer, in many ways, than the Sun King. But no one puffs out his chest and struts down the street, thinking of how much richer he is than Louis 14th.

Source: Getty Images

Tuesday, October 27th, 2026

Bill Bonner, from Ardmore, Ireland

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This is the third day of stormy weather. Blow, ye wind. Crack, ye thunder. The rain comes in horizontally from the Atlantic. The mist engulfs everything. The trees bend, including a couple that we just planted; they will need to be staked and tied down, given lifelines, like sailors in a squall.

It is deliciously gloomy. Normally, we go out for a couple of hours in the afternoon to get what doctors call ‘exercise’ and our blue-collar friends call ‘work.’ We are building the stone foundation for a greenhouse...recycling the stones from a ruined farmhouse and the vinyl windows from recently remodeled houses. The only serious expense is for the roof. It could be done in polycarbonate sheets, which would have been cheaper and easier. But double-paned glass will look better, and last for longer than we are likely to enjoy them.

So, the stonemasonry has had to wait. Yesterday, we spent the whole day near the fire, sipping cups of tea, while admiring the lash of the rain and the hula sway of the treetops.

This gave us time to think, a dangerous thing to do in any weather. Specifically, we were wondering about how much the fake, post-1971 dollar has faked up the whole economy...and how hard it is to make sense of it. Every sales number seems to be wearing a false mustache. Every profit goes by an alias. And even the simplest, most obvious trends are counterfeit. As we will see...even inflation itself is not what it claims to be. As synthetic as the vinyl windows, it is useful, but not authentic. (More on that tomorrow.)

First, comes an upbeat report from Charlie Bilello:

Americans now own over $60 trillion in stocks & mutual funds, more than 3x higher than a decade ago.

And here’s more good news, Chosun LBO:

The Wall Street Journal (WSJ), citing data from financial information firm FactSet on the 24th, reported that S&P 500 companies’ third-quarter net profits are expected to rise approximately 30% year-over-year. This estimate combines actual results from companies that have already reported and forecasts from those yet to announce.

The strong performance of NVIDIA and Micron is driven by surging demand for AI semiconductors, particularly memory chips. Suppliers have been able to command higher prices, significantly boosting profits.

Let’s see...a carpenter’s sales can go up when the plumber orders a new worktable. And the plumber’s earnings can increase when the butcher installs a new sink. And the butcher...well...you get the idea. Businesses can increase sales and profits by providing new tools and facilities to each other. Round and round, like a village of laundresses, washing each other’s underwear.

But ultimately, they must sell products and services to consumers...not just to their fellow producers. Paying each other for plant and equipment is just part of the aggregate cost of doing business. Businesses can exchange costs...but only so far as the profits from selling to consumers justify them. You build a new auto showroom...you have to move the wheels! Sure, you might sell a fleet of them to a neighboring delivery firm, but then...consumers still must pay for them.

Oh, if consumers only had the feds’ elastic accounts! Instead, their purchasing power and money are limited. And they are already at the limit. Charlie Bilello:

Real average hourly earnings have now declined on a YoY basis for six consecutive months, falling 0.7% over the past year. The stock market may be near record highs, but that doesn’t mean everyone is participating equally in the gains. Nearly 1 in 5 American families fell behind on debt payments in 2025, the highest share since 2010.

And it’s not as if consumers are expected to have more money any time soon. The Committee for a Responsible Federal Budget:

Social Security is Now Less Than Six Years from Insolvency

The Social Security retirement trust fund is now less than six years from insolvency, according to CRFB’s Insolvency Countdown Clock. Without action from policymakers, beneficiaries will face a deep and abrupt 22% benefit cut when the retirement fund is exhausted in late 2032. That is when today’s 61-year-olds will reach their normal retirement age and when today’s youngest retirees turn 68.

Since consumers can’t readily increase their consumption, a business can only increase sales and profits by taking them away from another business. Some win. Some lose. But the total amount of profits cannot, therefore, increase. Where could they come from?

Take the trucking industry, for example. There are about 3.5 million truck drivers in the country. And each one takes home about $51,000. Along comes AI...self-driving trucks. The truck drivers are out on the curb.

Bad news? No, it’s good news. Trucking companies will now save a lot of money. Plus, consumers would benefit from lower shipping costs...ultimately expressed in lower consumer prices. Shippers would be wealthier...and consumers too — since they would now be able to buy more products at cheaper prices.

But look what happens. The trucking firms’ costs go down. They compete for business by lowering their freight charges. Margins soon go back to what they were before.

We’d all be richer, right? But if we are all richer, nobody is really richer. The kind of wealth that everyone cares about is the kind you can flaunt. We’re all richer, in many ways, than the Sun King. But no one puffs out his chest and struts down the street, thinking of how much richer he is than Louis 14th. Increased productivity makes us all better off; it doesn’t get us all on the Forbes ’rich list.’

So, let’s look back at our headlines. Investors now have $60 trillion...3x more than in 2016. Do they really have ‘more?’ Or is this just another disguise?

The Dow was around 19,000 in 2016, with GDP around $19 trillion. Forgetting the zeros, one unit of stocks was worth about one unit of output. Now, the Dow is at 52,000 with GDP at $32 trillion. Investors believe they are richer. But now, each unit of the Dow is worth one unit of GDP...plus another 6/10ths of a unit of output that never gets put out…a kind of ghost GDP that no one ever enjoys.

And then we learn that the companies producing the phantom GDP are increasing their profits at a remarkable 30% rate.

But how could profits grow six times faster than GDP...in an economy trudging uphill at a (nominal) 5% rate, while staggering under more than $100 trillion of public and private debt? Where does the money come from? Consumers are tapped out. The ‘profits’ must come from other businesses...each borrowing and spending in the hope of future sales.

But to whom? The unemployed truck drivers?

More to come.

Regards,

Bill Bonner

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Research Note, by Dan Denning

Do stock market tops and infamous initial public offerings (IPOs) go hand in hand? We’re about to find out. Anthropic, maker of the Claude AI, filed it’s S-1 with the Securities and Exchange Commission. Gluttons for punishment can read it here. The company will trade on the Nasdaq with the ticker symbol ANT.

The window dressing? After five straight quarters reporting an operating loss, the company finally got in the black in the last quarter. Falling ‘compute’ costs helped. But revenues of $16.3 billion were 13x what they were a year ago.

Growth!

Non-cash losses are still enormous, thanks to the billions in future ‘compute’ commitments the company has made (an accounting reality, but still a reality). The company is looking at a $1.5 trillion market value on $16 billion in revenue. Compare that to Walmart, a company with a $965 billion market value on…$365 billion in revenue.

Investors will finally have the chance to buy directly into the AI trade. But is that the ‘top’? Bear in mind there are over 100 pages of ‘risk warnings’ in the IPO. The most stark one from the company’s owners is that inside Claude’s coding black box, the AI could grow ‘difficult for any individual or group of humans to understand and control.’ The phrases ‘catastrophic or existential risks’ appears three times (once with respect to ‘humanity’ and twice with respect to society.’)