The David Lin Report Markets Tank: Economist Explains Why Stocks Are In Freefall | Steve Hanke
Nov 7, 2025
Steve Hanke, an applied economics professor at Johns Hopkins and former Reagan advisor, dives into the recent tech market sell-off, exploring bubble metrics and the contagion risks of interconnected investments in AI. He discusses Argentina's endless debt crises, advocating for dollarization as a solution, and warns about gold’s potential bubble. Hanke also critiques the Fed's policy shifts, discussing how changes may impact inflation and M2 growth, while providing insights into U.S.-China relations and the strategic supply chain dominance of China.
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Equity Bubble Signals Align
- Multiple bubble detectors (Hanke, Buffett, Shiller) signal bubble territory in equities right now.
- Valuations price in future earnings that seem unrealistically high, prompting investor second thoughts.
Circular Deal Flow Raises Contagion Risk
- Interlocking investments and supply relationships among tech firms create circular exposures across the sector.
- A failing large player could trigger a doom loop and drag down the broader market.
Compare Yield Cost Before Buying Stocks
- Compare the cost to buy yield in stocks versus bonds when assessing equity valuations.
- Prefer bonds when it costs far less per dollar of income to obtain yield there than in equities.
