The breaking of the ‘real’ economy is here. This is how it happened, and why things can no longer return to normal

Those who write about the stock markets sometimes make me laugh.

Ok, fine. Quite often in fact.

But right now, here is what I can tell you I’m on the lookout for.

I am looking for anything in social media circles, financial print, and digital media that shows me a huge disconnect is underway.

And you would only be looking for it if you knew your real estate cycle history.

And wouldn’t you know it, like sharks to a pool of blood, that same media fell over themselves on the following news.

Nvidia passed Microsoft in market cap on Tuesday, once again becoming the most valuable publicly traded company in the world.

Good news, I guess, if you’re invested in Nvidia and AI stocks in general. But that misses the point.

Today I want to explain to you why the above news, and the subsequent US stock market performance this week, may well represent the breaking point I’ve been looking for.

The one where the mega cap mafia, led by the world’s most valuable company Nvidia, break away and leave behind a faltering and sicker real economy.

And with it, a true turning point in the final years of the real estate cycle.

When you see all three main American indices rally like they have recently, it must mean there is some good news about. And you’d be right. We aren’t talking about a short-term bear rally here.

Some significant economic news was released overnight that gives this current rally credence.

An upside surprise in the JOLTS (Jobs Opening & Labour Turnover Survey) report, where job openings printed 7.39 million versus the expected 7.1 million, landed like thunder amongst traders. Which led to widespread risk-on moves as market makers saw encouraging signs for the US economy despite recent tariff related jitters.

Besides the Nvidia move, the Russell 2000 small cap index rose 1.6%, led by its banking and energy components.  The information technology sector was up 1.5%, led by Nvidia, up 4.0%, while the energy sector rose 1.1%, materials by 1.0% and industrials by 0.8%.

It was a broad-based move higher across multiple sectors.

Of course, the AI trade that marked outstanding returns for investors in 2024 came roaring back. Hope-based optimism is rarely demonstrated better than by the performance of AI exposed stocks. It’s almost like DeepSeek never happened.

There is even scope for further good news to propel markets forwards with the Friday pay-roll data to drop.

You wouldn’t want to be a short trader today. They have hit a massive, short squeeze which involves a mass of short covers, which only exacerbates the buying even more. Small caps have led the way with huge bids during trading hours.

This appears to be a classic “markets climb a wall of worry” move.

Well, excuse me if I turn into a party popper.

If I have seen this reaction to such news once, I must have seen it dozens of times. When reporting like this gets frothy and emotional, what often transpires is the opposite.

People came back down off their highs and then asked the question “but is this for real?”. Right about the time when reality hits.

Don’t be at all surprised if that same reality sees these strong moves to the upside unravel just as quick.

And here’s why.

Among the good news and feel-good investing, something is rotten in the state of Denmark, er…the United States.

And it starts with the big picture. While the JOLT data was received with widespread acclaim, the OECD also announced something important. It downgraded its 2025 global GDP growth forecast to 2.9% from 3.1% and its U.S. GDP growth forecast to 1.6% from 2.2%.

That’s not good.

The culprit? Why, that would be Trump’s tariff policy. According to the OECD report, these tariffs are cooling global investment flows and crimping the global supply chain. Over in China, the Caixin PMI dropped to its lowest level since 2022, not something you want to hear if relying upon China’s factories to provide the boost world economies need.

This is the consequence of Trump’s reciprocal tariff clock. Then consider an upcoming talk between the presidents of the US and China due shortly.

Trump is looking for deals from everyone here, and he has placed them all on a so-called tariff clock to do so. Well, since his infamous April 2^nd ‘Liberation Day’ speech time is now starting to run out.

The majority of 90 day pauses on reciprocal tariffs are up early July. Makes one wonder what happens then if these deals aren’t on the table?

Regardless, the clues that I was looking for have now arrived. What we are currently seeing is the dislocation of the real economy from the speculative one. Where AI related stocks can go on a tear, bitcoin can hit all-time highs, while the real world you and I exist in falls further away.

This is what happens during the mania phase of the real estate cycle, also called the winner’s curse. As a society we care less and less as the overall economic news worsens, distracted and hopelessly captured by dreams of speculative riches as we are.

THAT IS HAPPENING RIGHT NOW.

This breakaway will not get resolved until the ultimate peak leads us into the mother of all crashes.

Both camps will now drift further and further away. Only one side will ever be truly heard by the masses. The one they want to hear. It won’t be the side of the argument they need to hear.

But folks, it is even worse than this.

Harsh words from what was one of the most powerful policy decision makers in the US.
What am I referring to?

Oh dear. Some bridges I suspect will need mending between Musk and his president. Who’d have thought that not long ago both men were attached to each other at the hip?

But why this sudden outburst of emotion and fury? It’s quite simple. It is aimed at those politicians who have announced their support for Trump’s proposed OBBBA Act (One Big Beautiful Bill Act) and indirectly the extension of the 2017 TCJA (Tax Cuts and Jobs Act).

Which the US House of Representatives passed in May.

And the reason for that is it will add roughly $3 trillion (for OBBBA) plus a further $2 trillion (for TCJA) to the federal deficit. It gets to the point where they are just numbers, it’s impossible to quantify it as anything real or with consequences such is the abandon with which these sums get thrown around.

There’s no such thing as a free lunch though, so important programs for less fortunate Americans such as Medicaid and SNAP (Supplemental Nutrition Assistance Program) will have their funding drastically cut.

Those who can least afford to pay, will be forced to pay the most. Have you ever seen a more egregious effort to enrich the few at the expense of the majority in your life?

Then there’s the irony that Trump’s tariffs can help pay for a lot of this!

Regardless, in order to replace the missing tax revenue, the US government must…yep, you guessed it….borrow!

This is the worst time to be doing this, not that anyone will tell Trump. Even Musk’s motives are not clear, given he stands to reap a handsome reward from these bills.

But the world is now on divergent paths, and each day the distance between them only widens.

Even though I’ve been awaiting this news to break, for quite a few years, I still to this day find myself in frank astonishment when it does in fact happen.

This is the power knowledge of the real estate cycle can give you. It also means I know full well how this is all going to end. What it will look like, feel like. And as we get closer to the final climatic end, have a very good idea of precisely when it will all unfold.

But that’s me. What’s more important is this. Do you know how this ends? Do you know what you should do when it does? Are you confident you’ve prepared yourself and your family for when the time comes for the inevitable collapse?

If there is even a moment of doubt about that, this must be your next step; become our latest Boom Bust Bulletin (BBB) member. Let the BBB guide you on the inherent timing of the economy only knowledge of the land market can give you.

Each month this history and knowledge will be yours via monthly written editions and video postcards that will help explain the real estate cycle like never before.

The end is coming and coming fast. These politicians either cannot or will not see it.

I find comfort knowing I have history on my side here. Please ensure that you also have that same comfort of what’s to come and what you do to protect yourself.

Sign up now.