The stock market session on Friday was catastrophic: the semiconductor index, the SOX, plunged 10.3%.Micron fell 13.3%, ARM Holdings 12.8%, Intel 11.3%, Qualcomm 11.0%, AMD 10.9%, Applied Materials 9.7%, and Nvidia 6.2%.
The Nasdaq 100 retreated 4.8% and the S&P 500 2.6%.
The Russell 2000 small-cap index plunged 3.5%.
Panic selling was widespread.
Financial stocks generally outperformed, with the NYSE Financial index falling only 0.2%.
Treasury bonds came under selling pressure, confirming that Treasuries are no longer a reliable hedge against equities and risky assets.
The risk-on/risk-off paradigm that allows people to remain in paper markets when things go wrong no longer works. This paradigm has broken down, as evidenced by the poor performance of risk-parity strategies.
The 10-year Treasury yield jumped six basis points on Friday to 4.53%.
Suddenly, cash has become more desirable than anything else, including traditional safe havens such as gold.
Overnight, cash — which nobody wanted and everyone was trying to get rid of — has once again become highly desirable, and its purchasing power in stock market terms has risen considerably in a single day!
Think about that the next time your bonus-hungry banker tells you, “Your cash earns nothing — buy stocks!”
The primary function of cash is to preserve your nominal capital, and that is already a great deal when you see how much one can lose in the stock market!
Of course, it earns nothing and suffers from inflation, but it is cash and does not suffer the sudden revulsions that can cause everything else to collapse.
Yesterday, “moneyness” — that is, the ability to exchange any financial asset for cash without too great a loss — took a severe hit!
Keep this in mind; one day it will prove useful.
Financial assets are merely “near money” or “quasi-money”; they are not true money! The moneyness of financial assets is a myth — a historical moment that will last only as long as authorities can control long-term rates and deploy the famous “PUT” introduced by Alan Greenspan and applied without exception ever since.
Some suggest that Friday’s session may foreshadow a potential historic top in the U.S. stock market.
Of course, all of this is speculative; no one can predict such things.
The real question is different:
Will the authorities, at some point, activate the famous PUT?
Do the authorities have the means to do so?
The answer to both questions is YES.
I recommend reading my latest financial editorial for a better understanding:
In short, destruction is inevitable — I keep repeating it — but it is still far too early for it to be too late to save the stock market.
The market still has work to do.
We are not in the year 2000, when the stock market rally was endured by the authorities. We are in 2026, when the rise is not only desired but necessary.
Remember my leitmotiv: “It’s march or die!”
But please do not put words in my mouth. I am not saying they will always succeed in controlling the markets. One day, it will escape them. For now, however, those responsible for market manipulation still have the means, plenty of ammunition, and willing accomplices in this endeavor.
Financial indicators clearly reflect an excess of confidence that is turning into speculative excess. “With SpaceX, Anthropic, and OpenAI on track to complete a historic triple IPO, only the most pessimistic could imagine a market collapse before Wall Street pockets its enormous gains.” It is cynical, but in our era, cynicism is justified.
In this context, euphoria indicators cannot serve as early warnings.
Things may be somewhat different after the great wave of distribution to the public and the shearing of the sheep, but we are not there yet.
To put it another way, borrowing Chuck Prince’s famous analogy: the orchestra has hit a wrong note, but the music is still playing, so we must keep dancing.
The dot-com bubble of 2000: a striking reminder for today’s markets?No!
I dismiss the comparison with the bursting of the dot-com bubble out of hand: the two situations are not comparable at all.
Yes, we are in a bubble as in 2000, but the difference is enormous! In 2026, we have the experience of what happened in 2000 and the tools that were tested in 2008 and 2020!
Believe me, that experience has been thoroughly studied. 2026 is like 2000, except that 2000 has already happened!
brunobertez 