16.04.2026 - Market Mania - Buffett Indicator!
The market momentum continues to accelerate. The Nasdaq has now posted 10 consecutive days of gains — the longest winning streak in years — highlighting the strength of the current risk-on environment.
Equities are increasingly pricing in a near-perfect scenario: progress in peace talks, a lasting ceasefire, declining oil prices, and cooling inflation. The combination of these factors fuels the perception that the macro backdrop is turning decisively supportive again.
At the same time, volatility has faded, and fear has largely disappeared from the market. Positioning reflects confidence. Markets are not trading current reality, but a forward-looking, highly optimistic outcome.
The Warren Buffett Indicator shows its highest point ever, marking with today’s value of 221% an overvaluation. Regarding Buffett, an overvaluation starts at 150%, a level above 200%, he calls it “playing with fire”.
Markets: overall sideways move after latest rally
My View: This is a classic “mania phase” — where markets extrapolate best-case scenarios and price them in as the base case.
The key driver right now is the expectation that upcoming talks will lead to a lasting resolution. But this also defines the risk.
If negotiations next week fail and the ceasefire expires, this entire setup can reverse very quickly. The current positioning leaves little room for disappointment. This is a situation to monitor closely as it unfolds.
At the same time, AI mania is back on the trading floor.
Those following my work know my stance: the biggest bottleneck remains energy. The scale of power required for data centers is massive, and often underestimated. This alone challenges the sustainability of the current investment wave.
Beyond that, the key question remains unanswered: how will the hundreds of billions being invested today translate into future free cash flows?
At this stage, I do not see a clear, scalable business model that justifies these valuations. AI will undoubtedly continue to develop and improve productivity, but in my view, it will remain a supportive tool, not a full economic replacement engine.
Markets, however, are once again pricing a much bigger story. And that gap between narrative and reality is where risk builds.
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