Crescat Capital – Nosebleed Territory: Market Cap/GDP Which Is 60% Higher Than Tech Bubble

Crescat Capital’s commentary for the monnth of April, 2026, titled, “Nosebleed Territory.”

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The US stock market is historically overvalued, posing a major potential risk to investors at large. The extent of the bubble is illustrated by Warren Buffett’s favorite valuation risk measure, total stock market value to GDP. It just reached a new high, 228%, 59% higher than it was at the peak of the Internet boom in 2000!

What Could Cause a Crash?

We see three catalysts that could play out simultaneously:

• Inflation – An oil supply shock caused by the Iran war on top of a metals supply cliff due to years of underinvestment in mining exploration and development
• A.I. Bust – Corporate cash flow and profit destruction from A.I. malinvestment
• Monetary tightening – On the heels of Jay Powell’s Quantitative Tightening (“QT”), see the downturn from 2022 in the chart below, Federal Reserve Chair nominee Kevin Warsh plans to reduce the central bank’s balance sheet even more. Never mind that Powell has already started Quantitative Easing (“QE”) again. See the 2026 turn-up in the chart. The Fed has been buying Treasury Bills and calling this new QE “reserve management purchases” or RMPs, not QE. Don’t be fooled. It’s money printing and a clear indication that the current Fed believes the financial markets need this lubrication. Warsh does not agree.