“Do you still see a correction in the stock market in the next few months?”
Near the end of Grey Swan Live! yesterday, a member in attendance was confused. Mark Jefovic and I had just ogled over “the quickening,” or the rapid acceleration of technological change we’re experiencing in real time. Can we still have a stock market correction while AI remakes the global economy?
My short answer: “Yes.”
Absolutely.
If you lived and invested through the tech boom and bust of the late millennium, you know the two things can be true at the same time. We can have breathtaking innovation and brutal losses. We can have rapid efficiency gains in the real economy and collapsing asset prices in the markets.
Technology can make things faster, cheaper, and more precise — but it doesn’t repeal market cycles, fix bad policy, or cure investor delusions.
Bill Bonner calls the current rally “ghost wealth”: “In the second quarter, it was the worst of them that did best. Meme stocks up 77%, bitcoin-sensitive stocks up 112%, and unprofitable techs up 57%. Ghost wealth.” His back-of-the-envelope calculation is that $30 trillion in wealth, globally, could be wiped out.
It’s a conundrum, I admit. But now I’ve got a name for it.
For context, I’ve been using ChatGPT as a copilot for a few months now while researching and writing in the morning. Yesterday, my AI assistant was “distracted and laggy.” I asked the robot why. The answer: “handover turbulence” — the system was upgrading from GPT-4 to GPT-5 mid-flight.
By the afternoon, it was running faster, pulling deep research, and drafting on the fly. Later in the day, my son — applying for a research internship — used GPT-5 to set up a series of hypothetical cancer experiments with live biostatistical datasets. The kind of work that once took a team and a week, maybe months, he had polished a presentation in under three hours.
He’s applying for an internship, mind you. His graduate degree in bioinformatics doesn’t even begin until January. It’s a new field that is emerging because of AI. Who knows how quickly it will evolve in the two years he’ll be applying theoretical concepts to live experiments.
The Quickening — the rapid acceleration of technological change — is real. Mark Jeftovic and I spent a good part of Grey Swan Live! talking about it yesterday, leading to confusion among the other Zoom participants.
Two things can be happening — rapid innovation and a stock market crash — at the same time.
Why this matters: You still have to be the human in the loop when it comes to managing your money.
The robots can work faster. That doesn’t automatically mean stocks will make you rich.
“Irrational exuberance” for stocks is a regular feature of stock market history. We see no reason why this time would be any different. (Source: Simon White)
We’re all “distracted and laggy” as wholesale rewiring of trade, geopolitics and the nature of money itself is taking place.
Like changing pilots in mid-air, you feel the bumps. The controls are twitchy. And no one’s quite sure if the next move will be a smooth correction… or a sudden drop. Let’s begin with today’s news:
Geopolitics at Cruising Altitude — For Now
Markets got a brief lift yesterday when word leaked that President Trump and Vladimir Putin may meet next week to talk tariffs and peace in Ukraine.
But like a tailwind that dies off, the boost didn’t last. Earnings came in so-so, and bond yields climbed after another disappointing debt auction.
It’s a reminder of the two-truths principle: a breakthrough in diplomacy can coexist with a market still weighed down by fundamentals. Investors want to believe in soft landings; reality has a way of reintroducing gravity.
The “Shadow Fed” Takes Shape
Trump’s feud with Jerome Powell has reached the point where “cut rates or be replaced” is no longer subtext — it’s the message. Christopher Waller is the frontrunner to take Powell’s seat, and Stephen Miran has been tapped to replace outgoing Fed Governor Adriana Kugler.
As the Bitcoin Historian noted on X: “President Trump just nominated pro-bitcoin advocate Stephen Miran to the Federal Reserve Board. He says BTC should have a ‘meaningful role’ in U.S. monetary policy. This is huge.”
With Waller’s rise and Miran’s arrival, we may be looking at a shadow Fed — a bloc ready to vote Trump’s way regardless of who holds the chair.
In theory, that could mean rate cuts on demand and a monetary rethink that rivals Nixon closing the gold window in 1971.
In practice, it’s another reminder: political hands on the controls can change the flight path quickly… and without warning.
Gold Tariffs — Instruments Recalibrating Mid-Flight
“They changed the rules mid-game,” Octavio, a veteran gold dealer, quipped on X.
In the bullion world, traders had been working under the assumption that one-kilo and 100-ounce gold bars — the industry’s bread and butter — would be exempt from Trump’s new reciprocal tariffs.
Then, without warning, U.S. Customs and Border Protection issued a ruling that these bars fall under a customs code subject to the levies.
The decision caught the market flat-footed. Switzerland, a major refining and trading hub, now faces a 39% duty on exports to the U.S. Bloomberg reports some in the trade even suspect the classification might be a CBP error. Whether mistake or design, the result is the same: disrupted trade flows, spiking costs, and gold futures hitting fresh records as safe-haven demand surges.
Liberation Day, Act Two — Cargo Re-Routing
Just past midnight, Trump declared billions in tariffs were “flowing into the United States.” Bigger hits — up to 50% on India and Brazil — are due later this month.
Talks with China and Mexico have been pushed to August and October.
First in line for sector-specific tariffs: semiconductors. A threatened 100% levy will spare only those making chips in America or building plants here.
Apple’s $100 billion pledge to expand U.S. manufacturing boosted its shares. TSMC jumped after word its U.S. plant would be exempt. Intel slumped after Trump demanded its CEO’s resignation over alleged China ties.
Even if the full tariff threat never lands, the repositioning costs are real. In turbulence, the cargo shifts whether you like it or not.
Quick Hits: The AI Arms Race
Tesla is winding down its Dojo supercomputer project, weeks after Musk promised he was doubling down.
Meanwhile, OpenAI is offering $1.5 million in bonuses over two years to every employee — even new hires — to fend off Meta.
Wedbush analyst Dan Ives has parlayed the AI boom into an ETF and, improbably, a fashion line featuring graffiti art and his own image.
Global Shift — Changing Airspace
For the first time since 2022, international markets are on track to outperform the U.S.
As we noted in Grey Swan Live! yesterday, M2 — a.k.a. “Cash” — is soaring globally and finding its way directly into stock markets. (Source: Bloomberg)
“The apparent lack of coordination is creating new uncertainty for multinational firms,” Goldman Sachs warned. Investors are steering toward airspace they think will avoid the full blast of Washington’s tariff headwinds.
“Stagflation” — Cabin Pressure Dropping
In the real economy, some strategists are dusting off Carter-era playbooks.
Tariffs are pushing up prices, growth is slowing, and the dollar is down 8% against a basket of peers. Trump’s abrupt firing of the Bureau of Labor Statistics commissioner after weak jobs data only adds to the sense that policy is being flown on gut feel.
Inflation can climb while growth stalls — just as it did in the late 1970s. Another two-truths moment that’s uncomfortable to live through, especially when you’re strapped in for a long ride.
And On The Nature of Money…
Trump is preparing to sign an order allowing crypto, private equity, and real estate in 401(k) accounts. Advocates see diversification. Critics see a $12.5 trillion retirement honeypot about to be ladled into illiquid, opaque, and speculative bowls.
As one pension manager told the Financial Times, “If Fartcoin makes it into a retirement plan, we’re finished as a civilization.”
Trump’s Great Reset is not just about new flight plans — it’s about what you’re allowed to carry in the hold.
Handover turbulence isn’t a call to jump. But it is a reminder to keep your seatbelt fastened, your bearings clear, and your hands firmly on the controls of your own money.
The robots can fly faster. They can’t fly for you.
~ Addison
P.S. If you fear AI is going to destroy millions of jobs, consider this stat:
In Grey Swan Live! yesterday, Mark Jeftovic and I also had a disturbing discussion about his idea that in the future, there will be “no jobs,” we’ll just be managing our wealth or the wealth we have inherited. The conversation took a turn to the macabre when we asked: “What if you are starting out with nothing?”
That’s where Universal Basic Income (UBI) and Universal Basic Social Credit (UBSC) — ideas advanced by OpenAI Sam Altman and our own Zoltan Istvan — creep in. We’ll reserve that investigation for another day.
Your thoughts? Please send them here: addison@greyswanfraternity.com
