{"text":[[{"start":3.36,"text":"Given the explosion in excitement about ancient Greek legends and myths, it is fitting that this week, several key protagonists in financial markets have, Icarus-style, flown too close to the sun."}],[{"start":17.82,"text":"Dazzled by ambition and hubris, and convinced of their invincibility, people as diverse as Korean day traders and the world’s most powerful central banker have been singed by the fierce heat of reality. None of this is a surprise, as such. Some of these reckonings were heavily advertised in advance. (If you have a working knowledge of markets and did not realise Korean stocks were overheating, then I have bad news for you about Santa Claus and the Easter bunny.)"}],[{"start":41.239,"text":"But to me, it is an indication that investors are finally showing signs of growing weary of the painfully obvious nonsense. The masters of hype are still doing what they do best. The reality, though, is that bond markets are caught in a perilous dance, big stock market indices have been flatlining for weeks and froth is getting knocked off the top."}],[{"start":60.4,"text":"Frothiest among equals is hedge fund Situational Awareness. Naming a hedge fund demands you convey confidence, a sense of resilience, but also just enough stardust to indicate exclusivity. Generally, the result is a hackneyed combination of rocks, forests and seasons. Not so for Leopold Aschenbrenner, the 24-year-old wunderkind who named his fund after a 165-page essay he wrote on the transformational power of AI."}],[{"start":87.856,"text":"This week it turned out his situational awareness did not extend to understanding the destructive power of leverage when bets go bad. It’s great on the way up, as evidenced by his 400 per cent returns in the first half of this year. But when his favoured tech bets took a hit in the past few weeks, calls from his banks demanding cash led to him selling the bulk of his portfolio to Ken Griffin, the embodiment of the Wall Street establishment."}],[{"start":111.887,"text":"Aschenbrenner will no doubt fight another day. But this is precisely the risk that staid institutions like the Bank of England have been warning about of late. Soaraway speculative bets funded with borrowed money have been all the rage, and they simply never end well."}],[{"start":null,"text":"
"}],[{"start":127.12,"text":"The fizz has also come off Korean stocks, which have provided one of the wilder rides of 2026, on the heels of shares in semiconductor companies. The Korean stocks index surged 150 per cent higher from January to late June, with the latter phase of the ascent fuelled by a proliferation of leveraged funds, but has now given up nearly half of those gains. Ordinary investors caught up in the frenzy are feeling the pain, with one telling the FT this week that her life is “screwed”. Korean authorities have now clamped down on the risky retail funds — too late, it seems, for hundreds of thousands of investors."}],[{"start":162.903,"text":"The forces behind the distress at Situational Awareness and the much sorrier tale of Korea’s have-a-go investors were grimly predictable, and indeed widely predicted: a dream of massive easy riches, perched on borrowed money and sitting atop a painfully narrow set of stocks. Perhaps the stock market listing of Elon Musk’s SpaceX really did ring a bell at the top of this speculative market cycle — its shares have now halved in value since their intraday peak in mid-June and are below the starting price."}],[{"start":191.505,"text":"Meanwhile, investors are turning an increasingly critical eye on the US Federal Reserve under Kevin Warsh. This week, the Fed kept interest rates on hold as widely expected and promised to keep up the fight with inflation, but long-term US government bonds fell heavily in price nonetheless, with 30-year yields — a key input into mortgage rates — striking the highest levels since the financial crisis. Higher borrowing costs were not part of the promised package from this new Fed chair."}],[{"start":219.167,"text":"This is the market’s way of saying it can’t wrap its head around the confident message from Warsh. He is trying to convey that the Fed is “on the case” on inflation, as he put it, but his distaste for “spoon feeding” markets with signals of his intentions means investors are left to fill in the blanks for themselves, leaving space to suspect political considerations may creep into the Fed chair’s thinking."}],[{"start":239.84,"text":"“The political reaction function is important,” said Salman Ahmed at Fidelity International. “The Fed does not operate in a vacuum.” Warsh has not crashed to earth here, but investors have demonstrated they are willing to show their teeth. Soothing words alone are not enough to turn this around."}],[{"start":256.582,"text":"Investors of all stripes are rejigging their portfolios to avoid excesses and faulty assumptions. Retail investors are selling individual stocks, chiefly in the tech sector, at the most rapid pace since the Covid crisis, according to research from Vanda. “Tech is taking the hit, not the broader market,” Vanda said. Meanwhile, the supposedly dreary UK stock market, devoid of racy tech names, hit a record high this week."}],[{"start":283.6,"text":"Investors know the hubris has been mounting and they are looking for nice, boring safety and stability. This is the best way to avoid getting singed."}],[{"start":294.85,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785564997_6348.mp3"}