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Posted May 27, 2026 at 12:46 pm
In this IBKR Midweek Minute, Andrew Wilkinson speaks with Kevin Davitt, Head of Index Options Content at Nasdaq, about the relentless market rally, AI bubble comparisons, energy prices and investor sentiment. They also explore the surprising reaction to moon base headlines and why home builder stocks failed to participate in the broader market enthusiasm.
The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.
Welcome to this week’s episode. Joining me from the Nasdaq is Kevin Davitt, Head of Index Options Content. We’re recording this episode on Wednesday, May 27th. Welcome to the program again, Kevin. How are you?
Thank you for having me back, and these short weeks are confusing. It’s Wednesday already, but I’m excited to talk about a relentless market.
Relentless is the word. I mean, it’s just two months ago since we watched Artemis II round the moon, and the administration this week has announced it intends to build a lunar base for human consumption by 2032. So my question to you, Kevin, is why didn’t the home builders rally more on that news?
Why didn’t the home builders rally more? Really, really good question. My reply back would be like, was David Bowie ahead of his time 50-plus years ago with “Life on Mars”? But that is not the point here. Your question and the behavior of one of the areas of the market that the past two months have left behind are the home builders, and certainly not something I’m an expert on, but over the past two months, the move we have seen both in the US and globally in interest rates is almost certainly a direct sort of drag on the housing market, whether it’s domestically or celestially.
I’m not sure how we would describe that, the moon, the idea of sort of living on the moon.
It’s the gravitational pull.
There you go. There you go.
But there’s a lot of technology companies did rally yesterday or Tuesday following the long Memorial Day weekend as a result of being associated with the space play.
So you’re absolutely right as far as that’s concerned. That area of the market has been sort of a hot little pocket. From my perspective, and again, this is just my view, elements of that remind me of the sort of collective animal spirits we saw in 2021 around just sort of niche areas, space included, that got very, very hot and then at some point they were not. Now, I’m not saying that is bound to happen around the corner, but I think about the likes of Virgin Galactic back then. And we are seeing some different names now, but animal spirits are out and interest in sort of pockets of the market I think are evidence of how widespread that’s become.
Kevin, we keep hearing about an AI bubble that could end the way the dot-com bust occurred back in about 2000. The big difference here is that these companies do have earnings, unlike the huge losses the original dot-coms had tied to them. So even in this bubble, it could still have plenty of growth, couldn’t it? What are your thoughts?
I like the way you framed that. So my first thought is that there’s always going to be people talking about bubble potential because that fear provokes a natural human reaction. Now, I am well aware that we have had a very significant broad market rally led by a relatively small group of stocks more recently. But that narrative has been largely unsuccessful for the better part of 17 years now, right? Your point about rallies like this having the potential to go on much longer than people would expect, I agree with. And as far as that first point about the companies and the leadership and the expansion we’ve seen really around revenues and profits, it is so markedly different than it was nearly 30 years ago now. I would point to, if people are confused on that, some research that my colleagues in the Nasdaq index team did very specific to this that shows things like the difference in PE ratios and just outright profits compared to the late ’90s. My last point there would be that this is not just limited to the Nasdaq-100.
You and I talk a lot about how the typical moniker around it is technology, and there is certainly a large cap growth skew to it. But this is reflective of the US and global economy. And it’s not just a tech thing, albeit very sort of semiconductor memory focused of late. Long-winded, sorry.
That’s okay. It’s a very good response. We seem to be… Well, things seem to be calming down on the Middle East front. Apart from a huge correction in stock prices last month, investors seem to be looking right through the problems in the Middle East. Arguably, in that case, this rally has the potential tailwind of lower energy prices ahead. Would you agree with that?
I would agree with that cautiously. I would potentially argue that we have seen that play out more recently, so kind of in the past handful of days as headlines have floated. I would say that the investing and trading public is increasingly inured to headlines because there have been so many, and really it hasn’t impacted the broader sentiment for a couple of months now.
Could that change? Certainly. But then the other point I would make is that energy prices, like sort of macro volatility, have the tendency to move up very quickly and then kind of stair-step lower, or some people say come down like a feather. And the impact, which I think you have seen going back to my point on interest rates on the longer end, the impact that that can have on the consumer and inflation data takes a significant time to sort of back out or get right.
These things don’t just come online immediately. And so I do think that the higher energy prices for longer is something that we will see continue to filter through the economy, both in the US and globally, probably for the rest of the year and maybe longer.
Good. Kevin Davitt, head of index options content at the Nasdaq. Thanks for joining me.
Thank you for having me.
And to the audience, thank you for your time today, and don’t forget, if you liked today’s episode, to subscribe wherever you download your podcasts from. Bye for now.
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