Why the Stock Market Makes No Sense Right Now
The stock market is ignoring global events, such as the war in Iran, due to the assumption that the US government will always intervene to prevent a market crash. This 'Greenspan put' mentality has led to a lack of risk pricing and potentially catastrophic consequences.
The stock market has been unaffected by the war in Iran, with markets barely flinching despite crude oil price swings and supply chain disruptions. The US government's history of intervening in times of economic crisis has led to a 'Greenspan put' mentality, where markets assume they will always be saved. This assumption has resulted in a lack of risk pricing, putting the global economy at risk. The Federal Reserve's actions, from Paul Volcker's rate hikes to Ben Bernanke's quantitative easing, have created a precedent for market salvation. The reliance on artificial intelligence as a rescuer is also vulnerable to the risks being ignored. The consequences of this market behavior are significant, with the potential for catastrophic outcomes.
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