Euphoric "Generals" in the Stock Market and Disgusted Generals in the Military
Investors couldn’t be more euphoric about the government shutdown today, taking the S&P up to yet another record in a long string of records. Warren Buffet, however, is not so excited. He’s still staying out of the market; and, because the euphoria has run so long, he now has more cash piled up at Berkshire Hathaway than ever in its history, as he continues to wait for a point where any stock looks like a sensible buy. According to mega investor Leon Cooperman, this all means the bull market has reached the final stage of bubblicious irrational exuberance according to Buffet’s life-cycle of a bull market:
“Once a bull market gets under way, and once you reach the point where everybody has made money no matter what system he or she followed, a crowd is attracted into the game that is responding not to interest rates and profits but simply to the fact that it seems a mistake to be out of stocks,” Buffett said in 1999.
That is where we are right now, Cooperman says, adding that the artificial-intelligence companies that have been leading the charge as the market “generals,” a term sometimes applied to the market’s leading stocks, are now valued “ridiculously high.” The market has gained nearly 40% since nearly crashing in March and April.
The Buffet Indicator, which compares total stock valuation against the economy’s actual performance, has never reached a summit as ridiculous as this one. Having passed the level that Buffet said was “playing with fire,” the indicator is so high now it makes the market peaks that hit before the dot-com bust, the Great Recession, and even during the post-pandemic-lockdown insanity look like mere speed bumps along the road:
At this never-seen-until-now level, the indicator means stocks are running far ahead of the actual economy as measured in GDP. In fact, the economy is looking more and more stale with each payroll report that comes in. New jobs, which were posted last month for August at a recessionary level of 54,000, just got revised down to a negative 3,000 jobs for August; and, today, ADP reported a minus 32,000 for September. Those numbers come from the giant payroll processor’s own data for private-company jobs only (no government). Economists were expecting a positive 51,000.
From general market euphoria to general disdain
Speaking of those euphoric market generals, we heard from some other generals who were far from euphoric today. A number of those who attended Pentagon Pete’s big general rally, had some harsh criticism to express for the dressing down, which they saw as a waste of money and time. Those getting dressed down due tend to see things that way, of course.
Here is a summary judgment of the meeting that was so all-important it required the immediate attendance of every general and admiral in the military from wherever they were, which seemed of little importance to many of them. They called it a …
90-minute spectacle that … was a political performance piece that should have been an email….
[Hegseth] delivered remarks about “fat generals,” men with beards, and “dudes in dresses” to a room packed with senior officers….
Officials dismissed the effort as a wasteful stunt meant to push grooming standards that align with the MAGA agenda….
“It‘s a waste of time for a lot of people who emphatically had better things they could and should be doing,” a former senior defense official told Politico. “It’s also an inexcusable strategic risk to concentrate so many leaders in the operational chain of command in the same publicly known time and place, to convey an inane message of little merit.”
Well, those complaints may have just been from the fat generals who were bothered that they will now have to diet. Perhaps we’ll hear from more of the attendees to see if this really summarizes the general opinion, or if it is just the opining of a few disgruntled pigs.