I've been watching this market for nearly two decades, and let me tell you—we're witnessing something truly bizarre right now. Something that defies conventional wisdom.
The stock market is showing all the classic symptoms of what I call "terminal phase euphoria"—that peculiar moment when investors collectively decide to ignore every flashing warning sign while stomping on the gas pedal. It's fascinating. And terrifying.
Tesla stalls but the stock rises. Meta and Microsoft post strong numbers and investors cheer (as expected). McDonald's reports its worst same-store sales decline in years and... crickets. Nothing happens. The golden arches lose their luster, and the market responds with a collective shrug, like a teenager who's been told to clean their room.
What we're seeing is nothing short of collective gaslighting on a massive scale.
The market keeps insisting everything's fine while displaying all the warning signs of a patient in denial. It reminds me of that friend who swears they're "just a bit under the weather" while hacking up a lung.
Look, the pattern is becoming disturbingly clear. Quarterly reports from major economic bellwethers are starting to sound recession alarms—and not subtle ones either. That McDonald's report? It's not just about Americans suddenly discovering home cooking. It signals weakening consumer spending and growing anti-American sentiment abroad. When a company that actually thrived during the 2008 financial collapse starts struggling... well, that should tell you something.
But here's what I find most fascinating: there's this unspoken pact among market participants that the party must continue, whatever the cost. The DJ's checking his watch, the bartender's calling last rounds, and yet everyone's ordering another drink.
I call it the "Orchestra on the Titanic" theory. Everyone can see the damn iceberg, but the music must play until the very last possible moment. Why? Because whoever acknowledges reality first loses.
We've somehow inverted the traditional relationship between economic news and market performance. Bad economic news used to tank markets (logical, right?). Now bad news often means markets rally (rate cuts coming!) while good news sometimes causes selloffs (oh no, stronger economy means no rate cuts!). It's a bizarre parallel universe where economic health can be perceived as a threat to market performance.
This distortion has reached its logical endpoint: economic warning signs are simply being ignored altogether. McDonald's troubling report should've been a four-alarm fire for consumer stocks. Instead? "Nothing to see here, folks. Move along."
(Having covered three major market cycles, I can tell you this willful blindness usually doesn't end well.)
You might wonder—I certainly do—why this collective delusion persists. I find the "Greater Fool" theory operating at an institutional scale explains it best. Major players know things look shaky, but being the first to head for the exits is career suicide if the music keeps playing for another quarter or two. Better to dance until the very end and then claim, "Nobody could have seen this coming!"
History shows these periods of mass suspension of disbelief can last longer than anyone thinks possible. The market can remain irrational longer than you can remain solvent, as Keynes supposedly said. Or was it someone else? The quote persists regardless of its accuracy... much like market optimism persists regardless of its foundation in reality.
For investors trying to navigate this funhouse hall of mirrors, the challenge is maintaining your grip on reality. When McDonald's—a company that typically thrives in downturns as people opt for cheaper meals—shows weakness, that's not just a random data point. It's a warning.
The coming quarters will reveal whether we're witnessing remarkable economic resilience or just the final stages of denial. Either way, remember that markets don't actually defy gravity—they just spend longer in the air than seems physically possible before eventually returning to earth.
And when that happens? The same analysts who saw nothing but blue skies will suddenly discover they had been warning about storms all along. That's the final stage of market gaslighting—the retroactive "I told you so."
I think I'll grab a Big Mac while I still can. For research purposes, of course.
