The Stock Market Is Doing Something We’ve Never Seen Before | Animal Spirits 463

Summary

Michael Batnick and Ben Carlson discuss record stock market valuations, mind-boggling earnings from the Magnificent 7, and massive AI capex spending. They also touch on gasoline prices, government debt, housing, private credit, prediction markets, and parenting. The overall tone is cautiously bullish on big tech but skeptical of extreme macro predictions.

• Paul Tudor Jones says market cap to GDP is at 252% and forward returns look negative, but hosts push back citing broader stock ownership.
• Mag7 earnings growth is unprecedented, with revenue and profit margins at all-time highs.
• Hyperscalers (Amazon, Meta, Microsoft, Google) plan to spend 77% more capex in 2026 than 2025, funded by surging operating cash flow.
• Long-term Treasury bonds (TLT) have lost money over 11 years and are in a 40% drawdown.
• Gasoline prices have spiked but are less burdensome after adjusting for wage growth and fuel efficiency.
• Government debt is near 100% of GDP, but hosts argue Treasuries remain the global safe haven and inflation is the bigger risk.
• Private credit BDCs show rising non-accrual stress and concentrated software exposure, though year-to-date returns are modest.
• Prediction markets have 75% of traders losing money, and insider trading is a concern.