The volatility in the financial markets over the last few weeks—including the behavior of GameStop, AMC, Tesla, Bitcoin, silver, and the proliferation of SPACs and IPOs—has heightened the conviction for some that the U.S. stock market is currently in a bubble of epic proportions, fueled by excessive monetary and fiscal stimulus, and by investors who are fully embracing the TINA, FOMO, and YOLO ideologies.
In this Economics Weekly, we take the view that while the U.S. stock market is expensive, it is still within the range of normal market cycle behavior.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.