Markets Explode Higher on Imaginary Peace Deals

Finance U Public Finance U
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Originally published at: https://peakprosperity.com/markets-explode-higher-on-imaginary-peace-deals/

We’re in the fog of war, and the level of propaganda and narrative structuring around the “markets” has reached a fever pitch. And so have equity prices around the world.

Who knew that a war in the Middle East that has led to the largest energy shock in human history would be so bullish?

Here’s Yahoo Finance on May 6th with a couple of narrative pitches to “explain” the explosive, historically unprecedented rise in stock prices:

First, the “report” was another Axios headline, citing unnamed sources, pitching the ridiculous notion that Iran had essentially agreed to every US wish-list condition in a one-page MOU (another ridiculous notion for such a complicated affair).Iran immediately denied having agreed to any such thing, but the “markets” didn’t care; they had the bullish headline they needed to support a bullish narrative.

But, more subtly, why would peace be so bullish when war itself has been so bullish?

Wouldn’t it stand to reason that if war is bullish, then peace is not? Shouldn’t it be one or the other if either was the cause?

Second, Paul Kiker and I discussed those “impressive AI-fueled tech earnings,” many of which are the result of circular cash flows, such as when Google invested in Anthropic, which then paid Google for data center usage.

Further, the erosion of free cash flows for the big 5 – Microsoft, Amazon, Meta, Google, and Oracle – tipping all the way from +$300 billion to –$40 billion over the past year is a huge red flag.

The hyperscalers are borrowing like crazy, burning all their free cash, and seemingly throwing all caution to the wind in their haste to build data centers. And still, to this day, neither Paul nor myself has come across a business plan that returns these investments before the installed chips burn themselves up.

Consider just the fact that the hyperscalers are building out the data centers on the basis of their committed future orders for business, but that a full trillion of that book has been ‘committed’ by just two companies: OpenAI and Anthropic.

Both companies are burning cash. Neither even has revenues anywhere close to the committed amounts. Both would have to 10x their revenues and profitability in just a couple of years for any of this to pencil out.

Oh, did I mention that Deepseek v4 (the Chinese AI version) is open source and vastly cheaper to operate than either ChaptGPT or Claude? How does one significantly raise revenue under those circumstances?

Finally, Paul and I discussed the fact that the stock market’s internals are throwing off highly conflicting signals.

On the one hand, earnings have smashed all expectations. That’s bullish.

On the other hand, market breadth is terrible as is the advance-decline data, which saw decliners outnumber advancers for four out of the last five closing index record highs.

So which is it? Will the real stock market please raise its hand?

As a couple of guys with some gray hairs, we both feel like we’ve been here and seen this before. This chart of the South Korean stock market (the “KOSPI” index), representing a country that’s absolutely reeling under the energy shock, pretty much sums it up:

LOL!

That’s a blow off top if ever we’ve seen one. Either that or fiat money is about to get torched in a serious way. Either way, not a good sign, more of an omen.

Timestamps

00:00 The Narrative War in Financial Markets
09:09 The Emotional Rollercoaster of Investing
20:43 The Dangers of Overconfidence and Arrogance
23:52 The Blow-Off Top Phenomenon
32:08 The Disconnect Between Reality and Market Behavior
37:13 Political Influence on Market Sentiment
39:26 Economic Pressures on Households
41:50 Investment Strategies in Uncertain Times
43:54 The Tale of Two Markets
46:08 Market Breadth and Underlying Weakness
48:12 The Role of AI in Market Valuations
53:46 Economic Indicators and Market Signals
01:00:07 The Importance of Prudence in Investing
01:16:33 The Jaws of Market Dynamics
01:18:38 The AI Revenue Dilemma
01:21:37 The Impact of AI on Employment
01:25:43 The Mirage of Future Profits
01:28:39 The Consumer’s Financial Strain
01:29:44 The Inflationary Spiral
01:35:06 Corporate Deception and Trust Issues
01:39:37 The Erosion of Morality in Business
01:41:26 The Future of Capitalism and Society

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When this implodes – and it will – it will be like nothing we’ve seen before in our lifetime.

https://x.com/zerohedge/status/2052351057158668476?s=20

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As the sage Michael Yon would probably inculcate: “We need to adjust our predictive paradigm” to accommodate the obnoxious, annoying “Rigged Financial Markets” phenomenon?

Chris Martenson with a long face and slurring his words: “Mmmmm…arrrr….kets’ in air quotes….”

Doug Casey and Ray Dalio would probably say: “You can rig the Markets in the short term, but you can’t rig History.”

We must now bow down low before the god of History and Go Long Precious Metals?

Michael Yon: “War is all about Routes, Resources, and Ideology.”

“That’s a Funky Paradigm, Michael, but the problem is that Ideology is a mental territory as big as Texas, and it can even include Satanism by the Elites.” Right?

“They” are Really Crazy….

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Michael Yon: “War is all about Routes, Resources, and Ideology.”

We probably need to get a much better handle on what exactly is the “Ideology” of the American Oligarchs?

It’s obviously not “Freedom” and “Free Markets”.

Something tells me that the AI’s are prohibited from telling us….

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So i listen to Chris a couple times a week and everytime i wonder should i sell my miners - gold silver unranium and my oil/gas related stocks? Reality is it is not a big % being irresponsibly long another physical asset but still would be nice to take profit and buy back cheaper
When this pops everything goes down
Or
There is certainly the theory of some that inflation money printing just causes the market to just keep going up

I guess Paul’s gotta play the game does suggest keeping some commodity investments might be good

Just want to get to other side - with inflation adjusted principal

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Meanwhile…

https://x.com/DowdEdward/status/2052453238621065695?s=20

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https://x.com/KAGdrogo/status/2052453838792335540?s=20

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Tip: don’t think of an investment as all or nothing.

So if miners are up significantly, you could sell say 10% and go to cash. Maybe you hold for potential downside in near term.

Or to buy stocks after a crash if you think that likely.

Or you roll it over into another investment.

Or you stock up on preps.

Or you treat yourself to something nice as a reward.

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I appreciate Paul and Chris’ analyses on this. However, I have to admit the constant theme is a bearish narrative and having beginning to listen to Chris since Covid first started, I feel it is easy for a lot of people to get paralyzed by fear and would have been missing out on the the gains of this “market” no matter how rigged it is. I can’t recall in the past 5 years or so ever being given recommendations by Chris or Paul to buy equities other than getting some precious metals and potentially some energy producers.

Perhaps Paul (being the finance guy) and Chris too could offer up some model portfolios that they would use for the typical PP subscriber. Many of us would not have the net worth or be in the right place in our lives at this time to use Paul for financial planning yet. But it would still help a lot of people if they could point the way of what they think would work so that those of us mainly stuck with passive ETFs could have something to work with to diversify beyond the S&P500.

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…are you looking for investment advice or lifestyle advice?

Collapse now and avoid the rush?

or

Settle your mare and remedievalize.

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There are many ways to diversify outside of stock markets and Chris indeed mentions some. PMs, land, water, food, health, community, energy, etc.

They are trying to avoid telling you what to do because it’s not specific advice.

Relevant story from today:

Had a conversation at a local entrepreneur promoter week requested by the mayor’s office. The man built AI agents. He was of course very bullish. “AI is coming. It cannot be ignored.” “AI will automate everything and anything.” “AI can make anything better.” “Imagine if AI taught kids. It would be amazing.”

My reply was, “It depends on the person.”

I argued, “Some kids don’t do sit down, shut up and study on a computer that well.”

He pointed out some kids don’t have the opportunity to study with a tutor. To that point, I agreed that people should always choose their best option. Don’t choose nothing, just because somewhere, there’s a better option that you don’t have.

If you listen to Paul, he says he uses a risk managed approach. He’s not telling you what trades to make, but he IS telling you what he’s doing. He’s saying he bets against himself in a strategic way that prevents losing if it goes the other way.

You are very correct that someone who sees risk and decides to do nothing is worse off. I would say these videos are very much not a good fit for such people. However, if you see risks and decide you’re going to not be blindsided, then hopefully your strategy helps you. Otherwise, update your thesis and try again.

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This is an excellent post and should be read by every member.

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What if one day Peak Prosperity goes the way of InfoWars and Alex Jones and becomes defunct and we lose the Common Sense and level-headed perspicacity of Chris Martenson?

Or, worse, one day Chris Martenson appears for his morning Wake Up Call bald with heavy circles under his eyes looking like he’s on LSD wearing a black robe and quoting Aleister Crowley?

Then, we’ll know that the Laurel Canyon crowd got-to-him, like they got to Bongino, RFK, Jr., and Tulsi Gabbard.

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At that point you will be in the same position your were in before that point: an adult responsible for your own future…

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There is so much fake news I can hardly bare to try keeping up.

Propaganda and lying always foreshadow bad things so I may not need to know more than the magnitude of fakeness and lying to be well informed.

Regardless of who is behind it all they want to control the systems I depend on more and I want less of that.

Planting a bigger garden, planning on even more and bigger gardens for next year.

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I’d pay double for that :innocent:

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I think ““they”” got to him!! LOL

ChatGPT Image May 8, 2026, 11_04_24 AM
ChatGPT Image May 8, 2026, 11_04_24 AM1672×941 341 KB

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I agree all or nothing is seldom a good way to operate.

This is why mutual funds work best for the average investor. Managers can roll out of some things and into others over time.

I have a small sum in a bank brokerage account. It was distributed by algo into various things. It went up steadily and too quickly according to my logic. It dropped around the time the war came along, and equally Illogically it rebounded too before war value, and started up again.

I am having fun learning in a low stakes way. My daughter informed me that the cost of doing my taxes with that account would exceed the increases if another CPA was doing the preparation. Seems that filing foreign income and other forms adds up. OOPS.

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Could the narrative be something bigger than the symptoms we currently see? Maybe we should look at the motivations of the WEF and other elite organizations. We appear to be on the fast track to owning nothing, affording nothing, UBI, tokenization, AI governance, censorship, programmable money… the list goes on.
The war and energy shock may be the great distraction and catalyst to give cover for a system change. I don’t think it’s a reset, more of a system change. I feel sure the west is now in position or very close to position to start it up. Heck, we’ll probably even vote our future oppressors in office this fall out of anger at Trump. Heads we lose, tails we don’t win.
The wild card is China and Russia.. What are they scheming and are they in on it? It’s remarkable how tolerant they both have been. It’s almost like they know something we don’t.

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I looked cahrt at 01:16:00 and free cash flow on every FAANG company is crashing… so this new reset means all of those companies try to end themselves(?)
Previously I have thought surely biggest companies like that can afford best CFOs, best accountants, strategists and so on so they avoid dumbest mistakes so this looks very wonky(amazon, MSFT, google almost all of those survived dotcom bust).

For Russia and China it is pretty simple: Russia knows they have oil and plenty of other resources. For China, Id think “diamond hands” to not get provoked in any thing and just see and watch west burn itself in folly is winning strategy. Time is friend of these countries.