The Everything Bubble is back and bigger than ever
QQQ•The columnist argues that speculation, leverage, trading activity and new issuance point to a renewed “Everything Bubble,” with greater downside risks than in 2021. US margin debt is at record levels, daily stock turnover topped $1 trillion in January, and debt tied to US tech giants and AI labs exceeds $3 trillion.
1. Five bubble signals
The article revisits five factors identified by Janus Henderson macro head Richard Bernstein in 2021: increased liquidity, leverage, market participation, new issues and turnover. Bernstein says financial conditions remain remarkably easy, margin debt is at record levels in dollar terms and relative to GDP, and hedge fund leverage is at an all-time high. Zero-day options account for around half of US stock-options turnover.
2. Speculation and issuance
The article describes the growth of prediction markets, tokenised equities and leveraged products, alongside Robinhood’s expansion from 18 million funded accounts before its July 2021 IPO to 28 million after adding 10 million customers. Robinhood’s revenue from event contracts now exceeds its crypto business. SpaceX raised a reported $75 billion in June, Anthropic is preparing a listing at a mooted $2 trillion valuation, and US stock turnover exceeded $1 trillion per day in January.
3. AI concentration risks
The article says the US stock market is more concentrated in a handful of giant companies and increasingly exposed to AI. It cites estimates that on- and off-balance-sheet debt for US tech giants and AI labs exceeds $3 trillion, and says circular financing among AI companies depends on expectations of accelerating revenue growth. The columnist warns that even a slight slowdown could undermine that structure.
