{"id":6994,"date":"2026-06-12T17:37:36","date_gmt":"2026-06-12T17:37:36","guid":{"rendered":"https:\/\/www.fintechpulse8.com\/?p=6994"},"modified":"2026-06-12T17:37:36","modified_gmt":"2026-06-12T17:37:36","slug":"the-economist-who-said-no-bubble-just-sounded-the-alarm-the-season-of-chaos-is-at-hand","status":"publish","type":"post","link":"https:\/\/www.fintechpulse8.com\/?p=6994","title":{"rendered":"The economist who said ‘no bubble’ just sounded the alarm: ‘The season of chaos is at hand’"},"content":{"rendered":"

<\/p>\n

Back in February, with the S&P 500 breaching 7,000 for the first time, Owen Lamont was one of the few economists willing to say it plainly: we are not in a bubble. Four months later, he\u2019s sounding the alarm.<\/p>\n

\n

\u201cThe chamber of dispersion has been opened,\u201d Lamont, a senior portfolio manager at Acadian Asset Management and former finance professor at the University of Chicago, Harvard, Yale, and Princeton, wrote in his Owenomics blog this week\u2014ahead of the massive SpaceX IPO. \u201cThe beast of volatility has awakened, and the season of chaos is at hand.\u201d<\/p>\n

The framework, now under pressure<\/h2>\n

Lamont\u2019s bubble-detection system relies on what he calls the \u201cFour Horsemen\u201d: overvaluation, bubble beliefs, equity issuance, and investor inflows. In February, with companies still buying back roughly $1 trillion in stock and the IPO market eerily quiet, only three of four conditions were met. \u201cI don\u2019t see the smart money acting like there\u2019s a bubble,\u201d he told Fortune<\/em> at the time. \u201cMaybe I should say there\u2019s not a bubble\u00a0yet<\/em>.\u201d<\/p>\n

The emphasis on \u201cyet\u201d was doing a lot of work. He warned that the missing horseman \u2014 issuance \u2014 could arrive at any moment. Indeed, Wall Street has been gearing up for a genuinely historic IPO pipeline. Blackstone\u2019s CEO told the Financial Times early this year that it was shaping up to be \u201cone of our largest IPO pipelines in history\u201d and Goldman Sachs\u2019 head of investment banking predicted to Fortune<\/em> that there would be an IPO \u201cmegacycle\u201d unlike anything before. <\/p>\n

In late May, Goldman Sachs updated its projection for gross IPO proceeds to a record $225 billion \u2014 up from $160 billion earlier in the year. Of course, this will be largely driven by Anthropic and OpenAI, which have both confidentially filed for IPOs, and by SpaceX, which is set to have the largest listing ever in the first week of June.<\/p>\n

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The market that changed in April<\/h2>\n

The specific trigger for Lamont\u2019s latest alarm isn\u2019t the IPO pipeline \u2014 it\u2019s what happened to chip stocks.<\/p>\n

Since April 2026, world stock market return dispersion has hit levels not seen since the peak of the dot-com bubble. In May, Micron Technology surged 87.8% in a single month. SK Hynix jumped 78.6%. Both stocks entered May with index weights below 1% in the MSCI All Country World Index \u2014 yet together they accounted for 17% of the entire index\u2019s 5.2% monthly return. In Lamont\u2019s 31-year dataset of more than 800,000 stock-month observations, those are the first- and fourth-largest contributions to index returns ever made by a stock with less than 1% weight. \u201cMay 2026 was very unusual,\u201d he noted.<\/p>\n

The dispersion readings for April and May 2026 \u2014 15.0% and 15.6%, respectively \u2014 rank third- and fourth-highest since 1995, trailing only December 1999 (18.2%) and February 2000 (15.9%). The average since 1995 is 7.6%.<\/p>\n

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The earnings expectations that break the map<\/h2>\n

Even before the dispersion data crystallized, Lamont was growing uneasy about the earnings story justifying valuations. On June 3, he published a note titled \u201cA pessimistic take on optimistic growth forecasts,\u201d arguing that the clearest bubble signal isn\u2019t price \u2014 it\u2019s the surge in earnings expectations used to rationalize price.<\/p>\n

Since 1985, he calculated, analysts have on average predicted 13% annual S&P 500 earnings growth; the realized figure has been closer to 7%. Expected long-term S&P 500 earnings growth has now hit 20.2% \u2014 exceeding even the 2000 peak of 18.6%. \u201cPerhaps when 2031 rolls around, we\u2019ll look back and see today\u2019s market valuation as another triumph of the efficient market hypothesis,\u201d he wrote. \u201cBut for me, today\u2019s optimism is yet another way in which 2026 is looking like 1999.\u201d<\/p>\n

Widespread unease<\/h2>\n

Lamont is far from a lone voice. JPMorgan CEO Jamie Dimon, speaking at Bernstein\u2019s Strategic Decisions Conference on May 27, described the deal environment as \u201cgung-ho, folks\u201d and reached for the word \u201cexuberance\u201d \u2014 the same loaded term Alan Greenspan used in 1996, three years before the dot-com crash. Dimon anchored his unease in four specific years \u2014 1972, 1986, 2000, and 2007 \u2014 each a moment when confidence was high right before the music stopped.<\/p>\n

Bridgewater Associates founder Ray Dalio told Bloomberg on June 3 that his proprietary bubble indicators showed U.S. equity markets \u201crising close to \u2014 not at \u2014 the same level in 2000 and the same level in 1929.\u201d <\/p>\n

Goldman Sachs\u2019 own global head of equity research, James Covello, was blunter still: \u201cAt some point, you\u2019ve got to make money. You make investments in a business so that you can generate returns and make money. And we\u2019ve gotten further away from that over the last couple years instead of closer to it.\u201d<\/p>\n

Bubble or rational repricing?<\/h2>\n

Still, Lamont resists rendering a verdict. He has long framed the massive hyperscaler AI spending as a \u201crational gamble\u201d rather than speculative mania \u2014 comparing it to the economics of drilling for oil or laying railroad tracks, where overbuilding is common in transformative technology waves but doesn\u2019t automatically constitute a bubble. The current dispersion, he notes, could reflect genuine fundamental repricing of AI-driven earnings \u2014 a 2020-style structural shock that continues \u2014 or 1999-style speculation that eventually reverses.<\/p>\n

But one thing is certain: \u201cIt\u2019s official: the world stock market is now as wild as it was during the tech-stock bubble,\u201d he wrote. \u201cSince April 2026, we\u2019ve had epic levels of return dispersion\u201d with \u201cAI excitement\u201d driving \u201cextreme price moves.\u201d It can be normal for small-cap stocks to surge 50% in a single month, but \u201cit\u2019s not normal for the whole market to be meaningfully impacted by extreme winners.\u201d <\/p>\n

The options market isn\u2019t betting on calm. The CBOE S&P 500 Dispersion Index, based on forward-looking options prices, is near all-time highs, signaling that traders expect volatility to remain elevated over the next month. For active managers, the squeeze is already real: any long-only manager benchmarked to the ACWI who didn\u2019t hold Micron and SK Hynix in May underperformed their benchmark by 0.9% \u2014 in a single month.<\/p>\n

The whirlwind, Lamont concludes, is a challenge \u201cevery market participant must confront\u201d \u2014 whether it proves to be a bubble, repricing, or some unstable mixture of both.<\/p>\n<\/div>\n

#economist #bubble #sounded #alarm #season #chaos #hand<\/p>\n","protected":false},"excerpt":{"rendered":"

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