The world is not driven by greed. It’s driven by envy. Legendary investor Charlie Munger wagered this view on the causes of unhappiness. While one may argue about the sequence of terms, there is little doubt that one leads to the other. As markets spiral and investors wrestle riddles in the K-shaped economy, a few observations.
Like the market value of Nvidia hit $5 trillion on Wednesday. It was 9.30 am in New York, around 1.30 pm in London, 7 pm in Mumbai and 9.30 pm in Beijing. Global investors and C-suites across time zones were agog on the meteoric rise of Jenson Huang’s baby. Founded in 1993, the gaming chipmaker hit the $100-billion mark in 2017 as it emerged in a new AI avatar.
In 2023, Nvidia was the seventh company to hit a value of $1 trillion. In 2025, it is the first company to hit the $5-trillion mark. The pace was set by the arrival of ChatGPT. If it were a nation, Nvidia would rank third in the world alongside Germany. Its value is higher than the market cap of the French stock market or 500 largest Indian companies. It is worth two Amazons or 25 Disneys, and worth more than the top 100 billionaires on the Bloomberg list.
On Wednesday, the US Federal Reserve cut rates by 0.25 percent. Fed Chair Jerome Powell struggled to justify the cut especially since inflation was nudging 3 percent. Powell also dodged the question on who benefits from the cuts. Indices went up and earnings reports show luxury goods makers and banks did well while auto lenders reported stress. A JP Morgan note titled ‘A Tale of Two Recoveries’ underlined a “significant bifurcation” in income groups on perceptions about the economy. Indeed, data from the Fed shows the top 0.1 percent of populace own equity and funds worth $12.2 trillion, while the bottom 50 percent own $0.54 trillion.
Like it is unclear if the frenzy in global marts is being driven by optimism, greed, or envy. The most bullish forecast placed the S&P500 at 7,100 by the end of the year; the index has already hit 6,900. While the index hits new highs, over 200 scrips show negative returns over a year. Investors wading in a swamp of acronyms ranging from YOLO to FOMO wonder if the new highs are a trick or a treat, as the chatter-cloud about the AI bubble—including a warning from the Bank of England—bulges bigger.
The data merits attention. The Magnificent7 tech stocks are worth $21 trillion, and S&P493 is a new metric to analyse the K-shaped market. Be that as it may, 11 trillion-dollar companies now account for $24 trillion out of S&P 500’s total market cap of $57 trillion. Nvidia’s market cap is six times that of the world’s biggest bank, J P Morgan. The S&P500 has a price-earnings ratio of 28.47 and the market is paying 40 times earnings for Mag7 stocks, hoping for riches.
Like the market is wondering if this time is indeed different. It has been argued that unlike in the 1990s’ bubble, tech companies are cash-rich and asset-light today. However, the $1 trillion of circular deals between chipmakers and users, Meta’s debt issue of $30 billion, and fears of a $200-billion flood of AI bonds have raised flags. How sure can the investor be that there isn’t another DeepSeek from China, India, or the UAE? With over $1.2-trillion debt tied to AI, Wall Street is pondering whether the pain will show up in the debt market or equity.
The rise in global indices is a curious jigsaw. Indices in richer economies growing slower are delivering higher returns. GDP growth in the US in 2025 is expected at 1.8 percent, and the S&P 500 is up 16.3 percent in the year to date. Japan, as per its central bank, is forecast to grow 0.7 percent, and the Nikkei225 is up 31.3 percent. The ECB forecast GDP growth in the Eurozone at 1.2 percent, while the German DAX is up 20 percent and French CAC 9.8 percent. The UK is expected to grow at 1.3 percent and the FTSE is up 17 percent. India is the fastest growing major economy, expected to notch up 6.6 percent, and the Nifty50 is up only 8.8 percent.
Like the volatility in gold (and silver) prices is riveting the attention of global investors. A raging debate is on as to why the price yo-yoed between $4,250 and $3,800. The lazy conclusion that gold prices reflect the rise and fall in global tensions is tempting. But what has changed materially? Neither the geopolitical nor the tariff issues are resolved. A plausible reason is the rise from $3,000 to $4,200 was fuelled by a retail rush. Effectively, the whales sold off while the minnows were rushing in, and maybe re-entering. Talk about K-shaped losses!
Finally, the concentration of wealth, resources, and attention has consequences. In New York, the capital of capitalism and home to Wall Street, Zohran Mamdani is leading opinion polls to be mayor on the promise of a rent freeze and cheaper grocery. The US government shutdown is about cuts to healthcare. In the UK, Chancellor of the Exchequer Rachael Reeves plans to tax the homes of the ultra-rich. Rage against immigration is the new constituency uniting the left and the right. Angst-and-anger is a time-tested mantra courted by the parish of populists. K-shaped economies catalyse K-shaped politics.
Read all columns by Shankkar Aiyar
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India
(shankkar.aiyar@gmail.com)
