The US stock market once again appears to be characterized by irrational exuberance. This time, that exuberance seems to be powered by the promise of an Artificial Intelligence revolution. That has led to a situation in which the stock market appears to be grossly overvalued.
It would seem that there are two dark clouds hanging over today’s stock market that would suggest it will be sooner rather than later that today’s excessive stock market valuations come back to earth. The first of these is the Strait of Hormuz closure. The second is the seeming unfolding of a world bond market crisis.
If the stock market seems to be ignoring geopolitical risks, it also seems to be overlooking an unfolding world bond market crisis, which is another reason to fear a world economic recession. This is all the more surprising given the recent spike in bond yields.
wildpixel/iStock via Getty Images
In December 1996, Alan Greenspan coined the term irrational exuberance. He did so to describe what he considered to be a grossly overvalued stock market driven by the promise of an internet-driven economic revolution.
