Bubbles must pop.

"Wall Street tumbled on Monday, January 27, on fears the big US companies that have feasted on artificial intelligence (AI) frenzy are threatened by DeepSeek, an AI competitor in China." Nvidia fell 17% and the Nasdaq Composite was down 3%. Mint. The Dow Jones Industrial Average was up 0.65% at 44,713.58, the Nasdaq was down 3.07% and the S&P 500 was down 1.46%. Reuters. "The world's 500 richest people, led by Nvidia Corp co-founder Jensen Huang, lost a combined $108 billion," as "Huang lost $20 billion or 20% of his wealth, Larry Ellison of Oracle lost $22.6 billion or 12% of his fortune, Michael Dell of Dell Inc lost $13 billion and Changpeng 'CZ' Zhao of Binance Holdings Ltd lost $12.1 billion. ET. "The overwhelming consensus is that the gap between America and the world is justified by the extraordinary earnings power of top US companies, their reach into the remotest corners of global trade, and their leading role in tech innovation - with AI the latest case in point. These strengths are real, but one definition of a bubble is a good idea gone too far," wrote Ruchir Sharma. "My calculations suggest that it now takes nearly two dollars of new govt debt to generate an additional dollar of US GDP growth - a 50% increase on just five years ago." So, "If the consensus on 'American exceptionalism' is so overwhelming, who is left to hop on the bandwagon and inflate it further?" "More likely, at some point next year, investors will baulk at financing runaway US spending," warned Sharma. We are into "next year" already. Indian stock markets could also have been in bubble territory when the S&P BSE Sensex reached an all-time high of 85,978.25 on 27 September 2024. Yahoo. It has fallen to 75,795.53 this morning. TOI. "The exodus of foreign portfolio investors (FPIs) from the Indian equity markets continues unabated, as they have withdrawn Rs 641.56 billion so far this month, driven by the depreciation of the rupee, a rise in US bond yields and expectations of a tepid earnings season." "The recent correction in indices comprising small and mid-sized companies (smids) may not be the end of the bloodbath for retail investors, with industry veterans pointing out that these stocks remain expensive." HT. Markets are falling because regression to the mean is at work, mutual funds tried to cash in by launching new schemes around which narratives have been built and the tendency of retail investors to look at what is happening in the short-term and project it forward, as if it will continue forever, wrote Vivek Kaul. Blowing bubbles is fun. But they must pop.