The stock market is now worth four times the entire U.S. economy. That has never happened before. 

In this week’s Market Alert, we look under the hood at inflated profits, a hesitant consumer, and why the punch that knocks you out may be the one you don’t see coming. 

If you’re within five years of retirement or recently retired, do you have a strategy to protect yourself from catastrophic losses? Watch the video to learn how our Invest and Protect Process is designed to do just that. 

• We got the Fed minutes this week, a lot of data from the biggest stores, and something else that is really interesting: we may be building a bubble here. 

• Right now, we’re looking at the widest gap between Wall Street and Main Street in history. Not the last 20 years. Ever. 

• The Fed is in a tough place because inflation is way higher than they want it to be, and normally the answer to that is to raise interest rates. 

• But the economy is starting to look softer and softer, and the answer to that is to lower interest rates. 

• So on the one hand, they want to raise rates. On the other hand, they want to lower them. 

• Right now, they’re basically stuck and probably not going to do anything until next year. 

• The bond market may be a better gauge of how the economy is doing than the stock market. 

• The stock market is basically a love affair. People fall in love with Nvidia, Tesla, or whatever it may be. 

• The bond market is different. It’s lending people money, so it tends to be more sane and more rational than the stock market. 

• And right now, the bond market is not celebrating. 

• The 30-year Treasury yield hit its highest level in nearly 20 years as oil goes up, gasoline prices rise, and the consumer gets hurt. 

• Meanwhile, the stock market is hitting new all-time highs. 

• So what is the consumer telling us? 

• Home Depot had its best numbers since 2022, but its CFO called the housing market “frozen.” 

• Customers have the means to spend, but they’re hesitant to buy anything. 

• Lowe’s missed, and Target’s numbers looked better, but nearly a billion dollars of Target’s profits came from tariff refunds. 

• These companies are booking tariff refunds as profit. It’s the same financial engineering we’ve been talking about with the AI companies. 

• Walmart’s CFO said very plainly that its customers remain stretched thin and are cutting back under the strain of high gas and food prices. 

• So basically, what we have is a hesitant consumer. 

• Now here’s where it gets really interesting. 

• The total value of the U.S. stock market is now over 400% of the size of the U.S. economy. 

• Before the dot-com peak, it was about 200%. Before the 1987 crash, it was 74%. Today, it’s 400%. 

• The stock market right now is feeling very frothy. 

• Just two big technology companies booked $150 billion of unrealized capital gains last quarter, paper gains on their AI investments. 

• That financial engineering inflated the S&P 500’s earnings picture by 50%. 

• If you take that out, earnings are closer to 20% growth, but the stock market is valuing them on 50% growth. 

• If the market wakes up and says, “We’re no longer valuing this at 50, now we’re valuing it at 20,” that could be a big drop. 

• Does that mean we’re going to have a big crash tomorrow? I don’t know. Maybe not, maybe yes. 

• But here’s what I do know: we have a plan to address it if it does. 

• It’s like tornado season in Texas. We know tornadoes are coming, we have sirens, we have shelters, and we have a plan to protect ourselves. We don’t know if one will actually hit us. 

• It’s the same thing with your retirement. If all these shenanigans and inflated profits come home to roost, we have our Invest and Protect process. 

• That does not mean we want to get out of the market right now. 

• The market could go up another year. Who knows? 

• We want to ride this as long as possible. 

• Our philosophy is unlimited upside with a tolerable downside. 

• If the market wants to keep going, we’re going to ride the wave right along with it. 

• But when it changes its mind and decides it’s going to go down a lot, that’s when we play defense. 

• The goal is to play great defense, not great offense. Defense wins championships, and that’s what we’re about. 

• Our strategy is not perfect and doesn’t mean we’ll avoid all losses, but we think it will mitigate them significantly should they arrive. 

• So what’s the big picture? Dark clouds, the Federal Reserve worried, and inflated profits in both retail companies and AI companies. 

• I’m not trying to scare you, just making you aware. 

• If the market decides it wants to keep going, we’re going to keep riding it right along with it. 

• You go play and enjoy your Second Childhood Without Parental Supervision. We’ll keep minding the store. 

Transcript:

Ken Moraif

Hello, everyone, and welcome back to our weekly market alert video for today, which is Friday, August 21, 2026. And as usual, I hope this video finds you healthy, wealthy, and wise. I wanna put out a special shout-out to all you squippers out there. I hope all of you who are retired are enjoying your second childhood without parental supervision, and those of you who are not retired yet, it is our singular goal to help you achieve whatever retirement means for you.

And, uh, certainly we want it to be a second childhood without parental supervision, whatever that means, right? So we have a lot to talk about this week. We have, uh, we got, uh, the Fed minutes. So what happens is the Fed gives us their decision, and then a week later, what they do is they tell us, you know, they release the minutes of the meeting so we can see what everybody said in the meeting, okay?

So there’s kind of a, a second shoe to drop kinda thing. Uh, the other thing that we got is we got a lot of data coming out from the biggest stores, Walmart, Target, um, Home Depot, Lowe’s. Uh, these companies are, uh, give us the best feel for how the consumer is doing, and so they gave us an insight that’s kind of interesting.

Uh, not necessarily good news, by the way. And then also, I wanna share with you something, you know, continuing in our theme, that we may be building a bubble here, uh, because right now we’re looking at the widest gap between Wall Street and Main Street in history. Not last 20 years. Ever, okay? So we’re gonna talk about why that may not be a good thing and, of course, why we have our Invest and Protect, right?

We wanna protect you from catastrophic losses should that occur. So before we get going, I just wanna share with you, um, you guys know that I’m a dog guy, but my wife has gotten us these two cats, and Toby is my buddy, and I hate, uh, you know, I, I have to admit, cats are okay. So what he does, he’s decided that in the morning when I’m getting ready, he sits in my sink, and he’s a big cat.

He’s a Maine Coon. He’s about this big right now, and he’s only six months old. So he sits in my sink. He curls up in my sink, basically, “Ken, pet me.” So he’s, like, in this se- self-contained little sink unit, and I just kinda like, uh, massage him. And I’m thinking, “Man, what a great life. I wish I had- … I could just lay in, you know, in a bathtub or something, and somebody comes over and massages me every morning.”

But anyway, I guess it’s therapeutic for us humans to pet cats. It feels that way anyway. So let’s talk about, uh- The Fed minutes. So the Fed came out on Wednesday, and they released the minutes from their late July meeting, okay? And, uh, and you may recall back then what they decided was that they weren’t gonna touch interest rates.

They weren’t gonna do anything with them. And, uh, the vote was divided nine to three, right? So three said, “No, we need to cut rates.” Nine said, “We do nothing.” Uh, I’m sorry, three of them said they wanted to raise rates. My apologies. So the minutes confirmed something that is, is really going on, and that is that the Fed, they’re kind of in a tough place because, on the one hand, inflation is way higher than they want it to be, and the answer to that normally is to raise interest rates.

But the problem is, as we’re looking at, and we’ll get into it, but as we’re looking at the economy, it’s starting to look like it’s getting softer and softer, and the answer to that is to lower interest rates. So on the one hand, they wanna raise them. On the other hand, they wanna lower them. So right now they’re basically probably not gonna do anything, and in fact, the odds of a September rate hike are now only 27%.

And you guys may remember at the beginning of the year, people were saying we’re gonna have three rate cuts, you know, this year, not rate hikes, right? So now we’re, we’re down to, uh, basically they’re stuck, probably not gonna do anything till next year, and that’s kind of a good thing in, in, in our view.

Now, one of the things, um, that you, you guys may know, I’ve talked to you about this many times before, and that is that the bond market is maybe a better arbiter, gauge of how the economy is doing than the stock market. And the reason why is because the stock market is basically a love affair. People buy stocks because they’ve fallen in love with them, right?

They fall in love with Nvidia. They fall in love with, uh, you know, whatever it may be, Tesla. So you’re in love, and you’re buying these stocks ’cause you’re in love. The bond market is not that way. The bond market is lending people money. That’s what a bond is. It’s actually lending somebody money. It’s a business transaction.

You know, I don’t care how much I love you or not, I gotta know you’re gonna pay me back. I gotta know that you’re financially solvent, that you’re gonna… All of those things. So the bond market in many, in many ways is more sane and more rational than the stock market. And 30-year Treasuries, uh, the yield, right, the interest rate, hit the highest level in nearly 20 years, the highest level of interest rate on the 30-year Treasury in 20 years.

And basically, this is because oil’s going up, gasoline prices are rising, consumer is hurt. So long-term borrowing costs are going up So what the, uh, bond market is saying is, “We think bad economic times are coming. We think inflation’s gonna remain high, and therefore, you know, we’re, w- we’re looking at, uh, raising interest rates is what the future’s gonna h- hold.”

So the bond market is not celebrating right now, okay? The stock market has new all-time highs and all that. The bond market, not so much. So let’s look at what the consumer’s telling us. Home Depot, all right? They had, uh, the best numbers they’ve come out with since 2022, but there’s a caveat. I, I’m gonna go into that with you.

Their CO- their CFO said, uh, he called the housing market frozen and said customers have the means to spend, they’re just hesitant to buy anything. And customer visits actually are down. So it means that fewer, fewer visits, but more purchases when they do visit, which leads… It’s gonna lead us into what I’m gonna talk about in a minute.

Lowe’s missed. Target, they, they are the best-looking number of all three of them, but here’s the thing about all three of them Nearly a billion dollars of Target’s profits came from tariff refunds. These companies are booking tariff refunds as profit. Okay? It’s the same financial engineering we’ve been talking about with the AI companies, you know, the, the Amazons and the Googles and all those guys.

They’re doing the same thing. Financial engineering is driving their stock prices, okay? So if you strip away Target’s billion dollars of profit from the tariffs, then their, the, the earnings did not grow that fast, okay? So Walmart, the CFO said very plainly that Walmart’s customers remain stretched thin, cutting back under the strain of high gas and food prices.

So basically, what we have is we have a hesitant consumer. Uh, we have, uh, these, these big retailers that are telling us, you know, their numbers look, uh, decent, but you strip away the tariff refunds and maybe they’re not so decent, and so now where do we sit? All right, so this one’s really interesting. So, uh, the, the, uh, chief global strategist, uh, David Kelly for JP Morgan calculated that the total value of all US corporate, the stock market, is now over 400% of the size of the US economy, okay?

So let me repeat that. And, and to put it in perspective, compar- d- compared to the actual economy, stocks are worth roughly, roughly double what they were before the dot-com peak because back then it was only 200% higher than, than the, the, the stock market was of the economy. Now it’s 400%. And before 2000, uh, or 1987, the biggest stock market crash in history, the stock market was 74% of the economy, and today 400%.

Okay? So compared to the actual economy, that is, you know, a pretty high number. And so the stock market right now is feeling, you know, very frothy. Now, he also… Here’s where it kind of gets even more interesting. He found that just two big technology companies booked 150 billion of unrealized capital gains last quarter, paper gains on their AI investments.

Same thing we’ve been telling you for, I don’t even, two or three months now. The, the, uh… And, and what that did is it inflated the S&P 500’s earnings by 50%. So the total stock market’s earnings picture was inflated by 50% because of these companies that are doing this AI, this, uh, financial engineering. If you take it out, then the earnings are closer to 20% growth, but the stock market is valuing it on a 50% growth Think about that.

If the m- stock market wakes up and says, “Okay, we’re no longer valuing this at 50, now we’re valuing it at 20,” that’s a big drop, right? From 50 to 20, what is that? It’s more than a 50% drop. That could be significant. Now, does this all mean that we’re gonna have a big crash tomorrow and that it’s all gonna happen?

I don’t know. You know, maybe not, maybe yes. But here’s what I do know. We have a plan to address it if it does. You know, it’s kinda like in Texas, we have tornadoes in the summertime, right? We know tornadoes are coming. We have sirens that go off. We have people who have tornado shelters. We have the means to essentially try to hide or protect ourselves from these terrible things.

Now, will they actually hit us? We don’t know, but we’re protected. We wanna know that we have a plan to deal with it. And that’s the same thing here. When it comes to your retirement, if we saw a 50% drop or more in the stock market because these companies are doing all this, these shenanigans, and inflating their stock prices, inflating their profits, if that comes home to roost, we have a plan, Invest and Protect.

Now, I was talking to a client, Doug. Hi, Doug. I won’t use any last name, but basically Doug was like, uh, “Ken, should we, should we just get out now? You know, you’ve convinced me that bad things are coming.” I’m like, “No, no, no, no, no.” You know, we want… W- I don’t know if it do- the market could go up another year.

Who knows, right? We wanna ride this as long as possible. The Invest and Protect, our process is, and our philosophy is, unlimited upside with a tolerable downside. So what that means is, is if the market wants to just keep going forever, we’re gonna ride the wave. We’re gonna ride it, ride along with it. Yeah, bring it on.

But when it changes its mind and it decides it’s gonna go down a lot, that’s when we play defense, that’s when we engage. And so, you know, and, and last week we talked about Paul Tudor Jones, right? Who made $100 million reportedly in the biggest stock market crash in the history of our country in 1987. $100 million back in ’87, he made that.

And his philosophy is the same as ours. The, the goal is to play great defense, not great offense. And again, you’ve heard it a million times, defense wins championships, and that’s what we’re about. So we wanna ride this wave as long as possible. I’m not trying to scare you, just making you aware. Um, and if it turns south, we have a plan to address it.

Now, our strategy is not perfect. You know, it doesn’t mean it’ll avoid all losses, but we think it’ll mitigate them significantly should they arrive. Now, I wanna tell you, uh, w- we have our third Thursday webinar series. Try saying that one three times in a row there, Alex. Uh, but, uh, we had a one on, on Medicare on Thursday night.

Huge success. It was great. For those of you who missed it, oh, man, you have no idea. We had more fun than a human being should be allowed to have when talking about Medicare, okay? So now, on September 17th, which is our next one, we’re gonna be talking about estate planning essentials, and that one is already…

We got a lot of people that have already, uh, uh, registered for it, so make sure you register for it. Just go to our website, rpoa.com, or talk to your, uh, your retirement planner and we’ll, we’ll get you registered for it. It’ll be at 6:00 PM Central Time on, uh, on the third Thursday of September. That’s the 17th.

So, uh, what’s the big picture of all of this? Dark clouds, Federal Reserve worried, inflated profits, both on retail companies and these AI companies. I don’t know. Doesn’t look good to me. But you know what? If the market decides it wants to keep going, we’re gonna keep riding it, right along with it. So I hope this video finds you healthy, wealthy, and wise.

Make sure you share this video with your friends and business associates. We don’t want them, if this does turn out to be a big, bad bear, we don’t want them to have terrible losses in their portfolios. You can help them if you introduce them to us, and potentially they become a client. So, uh, remember us when you’re talking to your friends.

All right, that’s all we have for you this week. I hope this video found you healthy, wealthy, and wise, and we will talk soon.

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to employees of RPOA on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of employees of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2026