Strait Hopes Lift Thin Markets

Hormuz hopes lift stocks and bonds ahead of this week’s PCE report

Key Takeaways

• Scarcity Premium in Stocks Is Set to Shift: Scarcity has been one of the hidden supports behind the buy-the-dip, and increasingly buy-the-high, stock market. The market is buoyed by sharp rallies in a narrow group of industries and stocks. It also triggers the meme-like swarming interest in certain names. The supply of public equities has been shrinking for years because of buybacks, the tendency of Big Tech to absorb many of the green shoots in the economy before they mature into large public companies. A wave of mega IPOs from companies such as OpenAI, Anthropic, and SpaceX could change that supply-demand balance, absorbing capital, reshuffling index weights, and weakening the scarcity premium that has helped push the current winners higher.