Icarus Rally

The Artificial Intelligence melt-up has now become the global equivalent of a Gamestop pump and dump.

Here we are witnessing summer market melt-up just as the Northeast (U.S.) including Wall Street is expecting sky-rocketing temperatures entering summer this week. It's perfect. Climate denialists and financial denialists alike can double down on the Wall Street pass line. I've become very much fatalistic lately as I see this society in late stage mental breakdown now chasing Tech bubbles to the sky based upon AI science fiction. Last week Microsoft was forced to remove some new AI software that was tracking every user movement in order to reverse engineer user activity. Today I was doing battle with an Adobe bot that was attempting to guess what I wanted to do next when I already had in mind what I was doing. Clicking through multiple prompts to exit their AI maze was not on my to do list. It was annoying and a total time waster to click "no" to several suggestions that had zero relevance to my task at hand. Which is what passes for artificial intelligence in a late stage IDIOCRACY. Picture massive new data centers being built at record pace to power Microsoft AI paper clips. You get the idea.

And so it is appropriate at this apex of the Asset Inflation (AI) bubble that we are now witnessing market cap wars between Nvidia and Apple, both of which were jockeying this past week for position as the second most overvalued company in the stock market. We just learned today that Nvidia won, compliments of record call option volume last week. For those who just joined us, this activity pictured below is what's called a "Gamma Squeeze". It's similar to a short squeeze but instead of actually buying a heavily shorted stock and paying a lot of money, what momentum gamblers do now is they buy large numbers of call options which forces market makers to buy huge amounts of stock using a lot of money. It's a leveraged short squeeze using rented capital. And it worked.

Full credit to market manipulation which is now openly embraced not only in junk stocks but now also in the largest market cap stocks in human history. That's a three trillion dollar gamma squeeze we're looking at. Considering that it took the SEC a full year to prove that Sam Bankman Fraud was guilty of criminal activity when he was openly buying Bahamas condos with FTX investor capital, one can imagine that this type of market manipulation is not on their radar. YET. Since they fully sanctioned the Gamestop squeeze as a victory for small investors.

So it is that one could be tempted - as most pundits are currently - to believe that this all time largest festival of idiots will go on "indefinitely". However, the term "indefinite" needs to be clarified to mean longer than anyone expects and then ending faster and more violently than anyone expects. I would suggest that we have achieved a level of market concentration and market buffoonery that will adequately challenge the fortitude of investors and central banks in a way that we've never seen in our lifetimes. It will be forever known as the Artificial Intelligence Meltdown. The moment when the machines took over markets and manipulated them up to a price point at which no one dared to challenge their dominance. Followed by a totally bidless out of control market on the way down.

Quite an experiment that I will be more than happy to watch.

From the sidelines.