Weekly Commentary: Party Like It's 1999, 1996 And 2007

2026-05-30 03:45:56 ET

We've gone and really done it this time.

Down somewhat from Wednesday's high, the rates market still ended the week pricing 95% probability of a 25 bps Fed rate hike in the next 11 months (57% by year end). If a rate cut - or even talk of higher rates - coincides with a problematic market downturn, disregard those who will be quick to blame for rate policy.

I'm reminded of the debate surrounding Federal Reserve rate policy leading up to the 1929 stock market crash. Some argued that a misguided Fed, fixated on stock market speculation, had remained excessively tight despite mounting economic vulnerability. More rigorous analysis would recognize that historic late-cycle Credit, speculative and economic "Roaring Twenties" excesses perpetuated precariously loose financial conditions. Like nowadays, responsibility for the inevitable bubble bursting lies with protracted loose money accommodation throughout the boom.

May 27 - Financial Times (George Steer and Michael Acton): "Semiconductor stocks have made their best start to a year since the dotcom bubble at the turn of the millennium… A roughly 75% gain since the start of the year has left the Philadelphia Semiconductor Index, which tracks 30 of the world's biggest US-listed chip manufacturers, on track for its largest annual return since 1999… The index has gained more than $5tn in market value over the past two months - about 1.5 times the value of the UK's flagship FTSE 100 index - on the back of increasingly optimistic bets on chip manufacturers' future earnings."...

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