A Great Market Paradox

We start today with a paradox. The U.S. stock market has never been larger — $63.8 trillion, by Goldman’s count. That’s double what it was just five years ago.

To put it in context: it took eight years, from 2012 to 2020, to double the last time. Now we’ve done it in five, with the S&P 500 clocking in another record just yesterday.

In sheer scale, the U.S. market is a colossus:

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The U.S. market now dwarfs Europe’s by more than threefold.

It’s even larger than the markets of Europe, China, Hong Kong, Japan, and India, combined.

Astonishing, really. But in that same breath, we’re reminded of history.

Since 1990, U.S. equities have outperformed the rest of the world 70% of the time:

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But in the handful of years when they started the year trailing by more than 2.8% — as they did this February — they never caught back up.

Not once.

In each of Bloomberg’s six cases, the second half of the year tended to be grim.

Blood in the Streets

In this morning’s research call, we joked — uncomfortably — about the old “Blood in the Streets” promo. It helped launch the U.S. edition of The Fleet Street Letter, whose prescient British editors warned of WWII in 1937.

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For the record, we don’t believe a crash is imminent.

But let’s also be clear: all the factors are in place:

Massive market distortions, a bloated Fed balance sheet, rising geopolitical stress, a crumbling currency, and political brinksmanship dressed up in red, white, and blue.

We’re not being alarmist.

We’re students of history.

The conditions we see today rhyme with every major market reversal we’ve studied — from 1929 to 2000 to 2008.

Yes, the term “blood in the streets” has been used so often it’s become cliché. But that doesn’t mean it’s wrong. And the real blood won’t be like this April’s “Liberation Day” selloff. It’ll be a relentless wave of selling that makes the 2022 bear market calm by comparison.

“The Nvidia Killer”

Elon Musk is set to revolutionize the AI industry with his latest invention.

It could make a lot of people rich in the process…

All while triggering a crash of up to 50% in the next 12 months in Nvidia and other popular AI stocks.

Which is why this former hedge-fund manager is calling it “the Nvidia killer”.

Click here to see Elon Musk’s new invention now.

The Crack-Up Boom Returns

Ludwig von Mises coined the term crack-up boom to describe the chaotic, euphoric end of an inflationary cycle — where the public, losing faith in the currency, buys anything of substance just to escape their evaporating money.

There are echoes of that now.

Stocks are at record highs, but only for a narrow group of companies. AI fever drives hiring and capital spending. Meanwhile, consumer credit card debt is at historic highs. Delinquencies are rising. The U.S. dollar lost 10% of its value — the worst first-half performance since Nixon killed the gold standard in 1973.

At the same time, we have a monetary experiment in stablecoins and central bank liquidity games — and a government attempting to finance its future with tax cuts and tariffs. It’s a crack-up boom in a digital wrapper.

Mid-Year Scorecard

So here we are. The S&P 500 rose 5.5% in the first half of 2025, despite the carnage following Liberation Day.

Meta hit a new high, thanks in part to Zuckerberg’s AI hiring binge. Meanwhile, the dollar has lost more ground in the first half of the year than it has in over 50 years.

Trump’s team is touting rate cuts, trade deals, and strong corporate earnings. But market optimism is colliding with a sinking greenback, evaporating bond demand, and a debt ceiling deal that adds $3.3 trillion in new red ink over the next decade, per the CBO.

The Dollar Gets the Blues

There’s no sugarcoating this: investors around the world are ditching dollars and long-term U.S. Treasurys. Why? Because confidence is cracking. Tariffs are stoking inflation. Bonds are less attractive with every Congressional budget gimmick.

Some analysts say a weaker dollar could benefit American manufacturers and tech firms earning overseas. Maybe. But that same weakness also accelerates the dollar’s decline as the world’s store of value.

This isn’t just about currency — it’s about credibility. And Washington’s running out of it.

Trump vs. Musk: Spite Store Politics

Nothing lays bare how the sausage gets made like a Congressional budget debate. The so-called “One Big Beautiful Bill” — a $3.3 trillion tax package — is inching its way through amendments.

Enter Elon Musk. In protest, he announced his plan to launch a new political party — “The America Party” — if the bill passes.

“Every member of Congress who campaigned on reducing government spending and then voted for the biggest debt increase in history should hang their head in shame!” Musk posted.

Trump, never one to let a slight go unreturned, fired back: Musk, he said, only exists because of subsidies. “Take away the subsidies, and Elon would probably have to close up shop and head back home to South Africa,” Trump posted this morning.

The bromance is over. The feud now resembles Larry David opening a spite store. But instead of lattes, it’s billionaires trading barbs over budget deficits and government pork.

The Common Thread?

The appearance of control is tenuous, at best. And slipping.

And that’s the common theme for today: control — of policy, of perception, of outcomes — is slipping.

Trump came into office promising a Great Reset: lower taxes, stronger trade deals, economic sovereignty, a return to American strength.

But now we see the contradictions. Debt is ballooning. The dollar is sinking. Musk is revolting. And the “success” of the market — this $63.8 trillion juggernaut — is starting to feel more like a burden than a badge.

There’s no shame in admitting the system’s under stress. The shame would be in ignoring it.

What to Do Now

We’re not fortune tellers, but we do pay attention. This is one of those moments when a few chess moves ahead beats reacting to headlines. So we’re trimming exposure to overvalued tech, adding some ballast with energy and metals, and taking a hard look at alternative currencies — not out of fear, but strategy.

The dollar may bounce, or it may continue its slide, but we’d rather be holding productive assets and real stores of value than betting on the Fed’s next pivot.

~Addison

P.S. Andrew and I will break it all down in this week’s Grey Swan Live!—Thursday, July 3 at 11 a.m. ET — where we’ll walk through the latest model portfolio adjustments and our strategy for navigating the second half of the year without losing your footing in the fog.

Your thoughts? Please send them here: addison@greyswanfraternity.com

We start today with a paradox. The U.S. stock market has never been larger — $63.8 trillion, by Goldman’s count. That’s double what it was just five years ago.

To put it in context: it took eight years, from 2012 to 2020, to double the last time. Now we’ve done it in five, with the S&P 500 clocking in another record just yesterday.

In sheer scale, the U.S. market is a colossus:

Turn Your Images On

The U.S. market now dwarfs Europe’s by more than threefold.

It’s even larger than the markets of Europe, China, Hong Kong, Japan, and India, combined.

Astonishing, really. But in that same breath, we’re reminded of history.

Since 1990, U.S. equities have outperformed the rest of the world 70% of the time:

Turn Your Images On

But in the handful of years when they started the year trailing by more than 2.8% — as they did this February — they never caught back up.

Not once.

In each of Bloomberg’s six cases, the second half of the year tended to be grim.

Blood in the Streets

Turn Your Images On

For the record, we don’t believe a crash is imminent.

But let’s also be clear: all the factors are in place:

Massive market distortions, a bloated Fed balance sheet, rising geopolitical stress, a crumbling currency, and political brinksmanship dressed up in red, white, and blue.

We’re not being alarmist.

We’re students of history.

The conditions we see today rhyme with every major market reversal we’ve studied — from 1929 to 2000 to 2008.

“The Nvidia Killer”

Elon Musk is set to revolutionize the AI industry with his latest invention.

It could make a lot of people rich in the process…

All while triggering a crash of up to 50% in the next 12 months in Nvidia and other popular AI stocks.

Which is why this former hedge-fund manager is calling it “the Nvidia killer”.

Click here to see Elon Musk’s new invention now.

The Crack-Up Boom Returns

There are echoes of that now.

Mid-Year Scorecard

So here we are. The S&P 500 rose 5.5% in the first half of 2025, despite the carnage following Liberation Day.

Meta hit a new high, thanks in part to Zuckerberg’s AI hiring binge. Meanwhile, the dollar has lost more ground in the first half of the year than it has in over 50 years.

The Dollar Gets the Blues

This isn’t just about currency — it’s about credibility. And Washington’s running out of it.

Trump vs. Musk: Spite Store Politics

Nothing lays bare how the sausage gets made like a Congressional budget debate. The so-called “One Big Beautiful Bill” — a $3.3 trillion tax package — is inching its way through amendments.

Enter Elon Musk. In protest, he announced his plan to launch a new political party — “The America Party” — if the bill passes.

“Every member of Congress who campaigned on reducing government spending and then voted for the biggest debt increase in history should hang their head in shame!” Musk posted.

The bromance is over. The feud now resembles Larry David opening a spite store. But instead of lattes, it’s billionaires trading barbs over budget deficits and government pork.

The Common Thread?

The appearance of control is tenuous, at best. And slipping.

And that’s the common theme for today: control — of policy, of perception, of outcomes — is slipping.

Trump came into office promising a Great Reset: lower taxes, stronger trade deals, economic sovereignty, a return to American strength.

There’s no shame in admitting the system’s under stress. The shame would be in ignoring it.

What to Do Now

The dollar may bounce, or it may continue its slide, but we’d rather be holding productive assets and real stores of value than betting on the Fed’s next pivot.

~Addison

Your thoughts? Please send them here: addison@greyswanfraternity.com

Trump and Powell are no buddies. They’ve been fighting over rate cuts all year—Trump demanding more, Powell holding back. Even after cutting twice, Trump called him “grossly incompetent” and said he’d “love to fire” him. The tension has been building for months.

And Trump now seems ready to install someone who shares his appetite for lower rates and easier money.

Trump has been dropping hints for weeks—saying on November 18, “I think I already know my choice,” and then doubling down last Sunday aboard Air Force One with, “I know who I am going to pick… we’ll be announcing it.”

He was referring to one Kevin Hassett, who—according to a recent Bloomberg report—has emerged as the overwhelming favorite to become the next Fed chair.

Here we sit — investors, analysts, retirees, accountants, even a few masochistic economists — gathered beneath the leafless monetary tree, rehearsing our lines as we wait for Jerome Powell to step onstage and tell us what the future means.

Spoiler: he can’t. But that does not stop us from waiting.

Tomorrow, he is expected to deliver the December rate cut. Polymarket odds sit at 96% for a dainty 25-point cut.

Trump, Navarro and Lutnick pine for 50 points.

And somewhere in the wings smiles Kevin Hassett — at 74% odds this morning, the presumed Powell successor — watching the last few snowflakes fall before his cue arrives.

With U.S. stocks trading at about 24 times forward earnings, plans for capital growth have to go off without a hitch. Given the billions of dollars in commitments by AI companies, financing to the hilt on debt, the most realistic outcome is a hitch.

On a valuation basis, global markets will likely show better returns than U.S. stocks in 2026.

America leads the world in innovation. A U.S. tech stock will naturally fetch a higher price than, say, a German brewery. But value matters, too.

As copper flowed into the United States, LME inventories thinned and backwardation steepened. Higher U.S. pricing, tariff protection, and lower political risk made American warehouses the most attractive destination for metal. Each new shipment strengthened the spread.

The arbitrage, once triggered, became self-reinforcing. Traders were not participating in theory; they were responding to the physical incentives in front of them.

The United States had quietly become the marginal buyer of the world’s most important industrial metal. China, long the gravitational center of global copper demand, found itself on the outside.

And Trump now seems ready to install someone who shares his appetite for lower rates and easier money.

He was referring to one Kevin Hassett, who—according to a recent Bloomberg report—has emerged as the overwhelming favorite to become the next Fed chair.

Spoiler: he can’t. But that does not stop us from waiting.

Tomorrow, he is expected to deliver the December rate cut. Polymarket odds sit at 96% for a dainty 25-point cut.

Trump, Navarro and Lutnick pine for 50 points.

And somewhere in the wings smiles Kevin Hassett — at 74% odds this morning, the presumed Powell successor — watching the last few snowflakes fall before his cue arrives.

On a valuation basis, global markets will likely show better returns than U.S. stocks in 2026.

America leads the world in innovation. A U.S. tech stock will naturally fetch a higher price than, say, a German brewery. But value matters, too.

The arbitrage, once triggered, became self-reinforcing. Traders were not participating in theory; they were responding to the physical incentives in front of them.

The United States had quietly become the marginal buyer of the world’s most important industrial metal. China, long the gravitational center of global copper demand, found itself on the outside.