Markets Weekly May 9, 2026

Summary

Joseph Wang discusses the weakening lower-income consumer, a parabolic semiconductor rally he believes will implode, and the Fed's financial stability report. He warns that the AI boom is driven by circular investments and leverage, making markets fragile. The report also highlights elevated farmland valuations and rising consumer credit stress.

• Consumer sentiment at record lows, wages decelerating, and real wages declining.
• Lower-income consumers are running out of money, as seen in earnings from Kraft Heinz, Planet Fitness, and Whirlpool.
• Semiconductor index (SOX) has gone parabolic, driven by momentum and leverage through call options.
• King the system fragile, with circular AI investments (hyperscalers investing in AI startups that then buy compute) as a key dynamic.
• Fed's financial stability report shows stock valuations elevated but not extreme; farmland is massively overvalued.
• Consumer credit card loans are rising across income levels, with auto delinquencies historically high.
• Private credit funds have liquidity buffers and gates, reducing systemic risk.
• Strait of Hormuz closure is drawing down global oil inventories, with potential scarcity in coming weeks.