MacroPass™: Kevin Muir On The Challenging Math Behind A Continued Melt-Up
Can stocks *really* keep vaulting higher for much longer?
This installment of our popular MacroPass™ service for premium members of this Substack comes from The Macro Tourist, Kevin Muir.
It’s a detailed look into the math behind a continued melt-up in stocks, which is increasingly looking improbable. With so many positive expectations built into prices, the economy would somehow have to surprise an already elevated hurdle rate for the bullish scenario to play out.
That said, he sees the market currently saturated with “melt-up maniacs” who are absolutely convinced that stocks are sure to keep vaulting higher over the coming months.
Kevin’s full write up is below.
To-date that list of contributors includes experts like Lacy Hunt (Hoisington), Stephanie Pomboy (Macro Mavens), Danielle DiMartino Booth (QI Research), Tom McClellan, Michael Howell (Capital Wars), Darius Dale (42 Macro), Doomberg, Ted Oakley (Oxbow Advisors), Kevin Muir (The Macro Tourist), Alf Peccatiello (The Macro Compass), Lance Lambert (ResiClub), Ed Yardini (Yardini Research), David Hay (Haymaker), Melody Wright (M3_Melody), David Stockman (Contra Corner), David Brady (FIPEST Report), John Rubino, Adam Kobeissi (The Kobeissi Letter), Sven Henrich (Northman Trader), Jeff Clark (The Gold Advisor), Charles Hugh Smith, Steven Bavaria (Inside the Income Factory®), Chris Whalen (The Institutional Risk Analyst), Felix Zulauf, Jesse Felder (The Felder Report), Brent Johnson (Macro Alchemist), Pieter Slegers, (Compounding Quality), Michael Oliver (Momentum Structural Analysis) and Anna Wong (Bloomberg Economics).
Recent MacroPass™ reports in this series include:
Steven Bavaria on how to receive a year’s worth of dividends in only 7 months
Pieter Slegers on 100 insights from the recent Berkshire Hathaway annual meeting
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MELT-UP MATH
The ‘tourist pushes back on the melt-up maniacs
Kevin Muir, Oct 11, 2025
I wish I had gotten this piece out before Friday’s large sell-off. Although many will blame the stock market’s rout solely on President Trump’s aggressive shift of tack regarding China’s trade policy, the conditions were in place for a change in trend. Whether it was the extended positioning of vol-control funds or the overwhelming conviction that we would rally into year-end, sentiment was extreme. In a different market environment, the same news would not have caused this level of carnage. The market reacted violently because almost everyone was set up for only good news. Eventually, there was bound to be some news that disappointed.
In the past couple of weeks, I have written about vol-control funds, but today I want to focus on the “melt-up” maniacs. These are the vocal market cheerleaders who firmly believe there is nothing stopping the US stock market from exploding higher into year-end.
Before I continue, let me get something out of the way. A good trader never says never. And not only that, trying to time the end of a bubble is a fool’s errand that only liars nail. Could the melt-up folks be correct? Sure. Anything is possible. However, just like in 2023 when everyone was bearish and convinced the economy was headed into recession, the cost of betting against consensus is low. Back then, if the economy rolled over, much of the bad news was already priced into the market, so to lose money, the recession would have to have been worse than the already low expectations. Today is the mirror opposite. With so many positive expectations built into prices, the economy would somehow have to surprise an already elevated hurdle rate for the bullish scenario to play out.
It’s always difficult to quantify what the market expects. Folks always seem to claim that their positions are contrarian. Like right now, there is a group of bulls calling this rise “the most hated rally.” Hated rally? Huhhhh???? I know almost no outright bears. When I express skepticism or concern, I am labelled a GOMYAC™ (Grumpy Old Man Yelling At Clouds!) and laughed at for not understanding the inevitability of the market’s advance. That’s fine. I’m a big boy and happy to have someone to trade with. It comes with the territory. If everyone agreed with me, then by definition, it wouldn’t be an attractive trade.
Yet, even the bears are bullish. Many of the folks who believe the market is ridiculously priced are doing their best Chuck Prince impression. And sure, some of them will find chairs when the music stops, but that’s not a game that I want to play. I’d rather sit on the sidelines and wait for the next game when the consequences of being wrong aren’t so high.
I’m sure many will claim that there are plenty of bears, but I can’t find them. All I see is
