More Thoughts On The Latest 'Big Short' & Other Matters

On Tuesday, investors sold AI-related stocks on news that Michael Burry had shorted Palantir and Nvidia. Today, investors realized that his most prominent short position by far is in Palantir, which currently has a forward P/E of 212.9. Nvidia has a forward P/E of 32.7 (chart). Except for Tesla, the other Magnificent-7 have lower forward P/Es than Nvidia. Burry is famous for his "Big Short" bet on the collapse of the housing market during the Great Financial Crisis. His current stance seems more like a big short on Palantir than a bet that AI is a bubble about to burst.

The stock market gave up some of its gains as the day progressed. The Supreme Court met to consider whether Trump's tariffs are unconstitutional. The judges asked Trump's lawyer questions that suggested they are leaning toward ruling against Trump's tariffs. That sent the 10-year bond yield higher since the Treasury would no longer collect those customs duties and would have to refund what was already collected (chart).