On Thursday, the Dow Jones Industrial Average tumbled about 800 points. As of Friday morning, the Dow Jones Industrial Average futures were also tumbling.

What the hell is going on?

It may be that many people are beginning to realize that a lot of these big tech companies, which are investing in each other, are betting on a payoff from AI that may not actually accrue to those companies.

For example, Oracle has become a heavy investor in OpenAI, which is the parent company of ChatGPT. OpenAI is not publicly traded, but you have a bunch of publicly traded companies that are basically doing circular cash deals with OpenAI. Thus, if you’re investing in Oracle, you’re partially investing in OpenAI. Or if you are investing in Nvidia, you are partially investing in OpenAI. A lot of money is being passed between all of these companies at the top end of the market, because some provide services to other members of that particular crew.

The question is: Are the gains from AI going to accrue to OpenAI? To Meta? Who will actually benefit from the productivity increases we’re going to see from AI?

AI is going to be transformative for the economy. You will be using AI in your job if you’re not already. AI is going to increase productivity.

Does that mean those companies are then reaping the benefits in terms of profits for them? What keeps the wheels spinning for those companies? That’s the question a lot of investors are beginning to ask.

I’m highly skeptical that the Fed will cut rates, given the current state of the economy. Inflation has not been put to bed, and liquidity actually is not all that hard to get for businesses right now. Inflating the economy by lowering those interest rates again and pumping more money into the economy could be a mistake.

The S&P 500 fell 1.7% on Thursday. The Dow dropped 1.7%. The tech-heavy Nasdaq Composite sank 2.3%. Those are the biggest declines for all three major indices since October 10.

What does it show? If the economy is this responsive to the possibility of a Fed rate cut or a Fed rate increase, that is not a strong economy.

If what you’re worried about is whether there’s going to be incrementally lower interest rates for businesses to artificially spice things up in terms of liquidity, to inject more money into the economy, and that’s what you’re waiting on, that does not bode well. It does not mean that the fundamentals seem particularly strong.

Why? Because so much of what is happening at the top end of the market and the vast majority of the gains in the stock market are located in the Magnificent Seven. The rest of the stock market over the past couple of years has been essentially flat, with perhaps a slight increase, while the top end of the market has exploded. That’s what’s driven the Dow Jones Industrial Average up to 48,000.

It’s everybody betting on the same horses over and over and over and over again. And if you keep betting on the same horses over and over and over and those horses don’t come in, things get ugly. What happens if OpenAI does not deliver the gains it may have promised?

People are starting to divest a little bit from the top of the market. That’s why you’re seeing the market start to drop a little bit right now. You could see that turned into a wave if, for example, Open AI ever reports any bad news or if one of these other major AI companies starts to report decreased profit share or people start to think, generally speaking, that it’ll take longer than they thought it would for AI to filter into every aspect of the market and then down to the original companies.

I’m not saying that a stock market crash is imminent. I am saying that there is a bubble. In real estate, there’s a bubble; in tech, there’s a bubble.

And so the market is reflecting that.

President Donald Trump issued an executive order on Friday modifying his so-called reciprocal tariffs to specify that certain foods and agricultural products from countries around the world “will no longer be subject to those tariffs.”

The White House announced the move in a fact sheet, which stated that the president is focused on “strengthening the U.S. economy.” The tariff rollback will apply to food items that are not grown or produced in the United States in “sufficient quantities,” including beef, coffee, tea, bananas, oranges, tomatoes, and tropical fruits and fruit juices, the White House said.

“Today’s Order follows the significant progress the President has made in securing more reciprocal terms for our bilateral trade relationships,” the White House fact sheet stated. “President Trump’s deals have had and will continue to have broad impacts on domestic production and the economy as a whole, including enhanced market access for our agriculture exporters.”

Treasury Secretary Scott Bessent hinted at the move earlier this week, promising that the Trump administration would make some big announcements “that will bring the prices down very quickly.” The administration has recently focused its attention on addressing Americans’ economic woes.

President Trump told The Washington Examiner in an interview on Friday that working to lower consumer and housing costs remains a central part of his agenda. Trump dismissed Democrats who have recently complained about an “affordability crisis,” arguing that the economy has improved since he took office.

“We’re working to make things less expensive,” Trump said. “We’re cutting some prices very substantially, but what is terrible is the Democrats have catchphrases.”

“They came up with a soundbite. Affordability. Affordability. Well, what we are doing is making things cost less,” he added.

Earlier on Friday, the White House announced “breakthrough trade deals” with Argentina, Ecuador, El Salvador, and Guatemala that would help lower the prices of some food items. Under those deals, the Trump administration is expected to lower tariffs on some food products, which could lower the cost of items such as coffee and bananas, according to a senior Trump administration official, Reuters reported.

Trump’s executive order marks a major turn in the president’s trade strategy, but the White House maintains that Trump’s tariff policies are working for the American people.

“President Trump’s tariff policies have delivered significant and lasting wins for the American people through fair, tough, and strategic trade negotiations, strengthening the U.S. economy and national security while breaking down unfair trade barriers that have harmed American workers for decades,” the White House said, adding, “The Administration will continue to use all available tools to protect our national security, advance our economic interests, and uphold a system of trade based in fairness and reciprocity.”