Pyrrhic

In the past twelve months the S&P – the world’s most important equity market – is up 30%.

On Bay Street, in reviled Toronto, the Canadian market has grown 38% in the same period.

This freaks out a lot of people who want to believe the world, and Canada, are pooched.

We all know the problems. Trump. Wars. Inflation. Political angst. Houses people can’t afford. Stagnant incomes and rising prices. As mentioned here yesterday, the young are especially susceptible to joining this moanfest, believing the times are the worst ever because they’re the worst in their lives. Lack of perspective + inexperience = fear. It never fails.

Meanwhile a lot of people are making money, obviously, or equity values would not be romping higher. It seemed a shock the S&P would hit a new record high last week in the midst of an energy crisis and a war America is (shockingly) losing. But it did. Investors are pumped.

Inflows into global equity funds, by the way, surged last week to the highest level in the past year and a half. Yes, before Iran. Before Trump 2.0. Investors dumped another $48.7 billion into these ETFs, the greatest amount since back in November of 2024, when Kamala Harris was still a thing (remember her?) and our prime minister was the guy with nice hair and Katy Perry.

Why are investors doing this?

Because they’re looking to grow their capital and are energized by AI and corporate profits. The current earnings season is going nicely (banks are raking it in) and it’s estimated 2026 could deliver a 17% expansion in the bottom line of S&P companies.

AI will help that happen. So will stock buybacks And layoffs. Lots and lots of lost jobs.

Look at Meta, for example, which used to be Facebook in the olden days. The company will be spending a Herculean amount on AI development and data centre infrastructure this year – up to $69 billion. That will be financed in part by punting 8,000 employees, or 10% of the company’s workforce.

Meta stock is up 9% over the past month and has gained 27% in the past twelve. Investors took the slashing of employees with a grain. Concurrently, Snap, Amazon, Salesforce, Block and others have been engaged in employee bloodletting. This has happened while a greater number of tech companies have been gobbling up their own stock. Like Adobe – announcing this week it will spend a staggering $25 billion to chow down a quarter of its outstanding shares.

Overall, more than 104,000 highly-paid tech employees have been shown the door in the last four months. Microsoft is offering a buyout to 7% of its workforce (8,750) while GoPro is dumping a quarter of its employees, Oracle is taking the hatchet to as many as 30,000 of its staff, Intel is getting rid of 24,000 and Amazon’s head-rolling count could end up being over 25,000.

The market basically loves this stuff. Corporate overhead goes down. More operating income can flow to capex (capital expenditures). AI adoption means more business activity, better productivity, lower costs and enhanced profitability. And the massive buildout of data centres means capacity to sell AI services throughout the global economy with a minimum of human involvement.

That’s good. After all, humans are costly and unreliable. They constantly whine about wanting more money, moan about irrelevancies like cost-of-living and children, ask for weekends and evenings off, get sick and expect to retire in financial dignity. Incredible.

Well, it’s here. The AI mindset. Technology’s finest hour – at least in the minds of folks like Bezos, Musk and Zuck. The billionaire class has engendered the rise of millions of millionaires, many of them wealthy for doing nothing else but sticking their wealth into the equity market.

Can this continue?

The short answer seems to be, of course. We are to AI what dial-up and AOL was to the online world decades ago. Everything from mass surveillance to autonomous weapons of war and workerless corporations are at hand. And with that comes the potential for political upheaval and social chaos.

It’s interesting that “micro-looting” is now widespread. Growing numbers of folks feel justified in taking food from grocery giants without paying for it, or ripping off a Netflix password or pirating music because, well, it’s only fair. Wealth inequality is extreme. Bezos won’t miss a few dollars. Besides, they’re trashing jobs while the normies struggle.

This will probably get ugly. Stay invested.

About the picture: “The Mr. waiting for me to finish reading your blog.” writes Dianna in Ontario, “and play with him. Long time reader and client. Keep fighting the good fight.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/04/24/pyrrhic/