Euphoria on Wall Street, Exhaustion on Main Street

Or Why I Feel Like I'm Taking Crazy Pills

Wall Street is riding another wave of blind optimism. Meme stocks are back. Sydney Sweeney is causing investors to pile into American Eagle like it’s the next gold rush. Nvidia’s worth $4 trillion. Everyone’s talking about AI.

If you just glanced at the headlines, you’d think everything’s fine—better than fine. But that’s the illusion.

Because out on Main Street, things are rough. Small businesses are hanging on. Consumers are buried in debt. Bankruptcies are rising. Delinquencies are climbing. And the people actually doing the work? They’re feeling it. Nothing makes sense.

The Market’s Having a Party. Main Street’s Cleaning Up the Mess.

The Barclays Equity Euphoria Indicator is spiking. Last time we saw numbers like this, GameStop was rocketing 1,500% on Reddit buzz. That didn’t end well. This won’t either. Euphoria always burns out.

Institutions know it. They’re pulling out—$8.5 billion in equities sold over four weeks. Retail traders, on the other hand, are charging in—$1.3 billion a day. Same old story. The Journal of Finance calls it what it is: retail investors chase tops.

Meanwhile, corporate buybacks are back. $293 billion worth. Looks like confidence, right? But most buybacks don’t help the business. They help executives hit stock targets and cash in options. A short-term boost with long-term nothing.

Consumers and Small Businesses Are Tapped Out

Americans are sitting on $18.2 trillion in household debt—up $167 billion just in Q1 2025. Serious delinquencies—loans 90 days or more overdue—have jumped to 2.8%, up from 2% last year. Credit card balances are over $1 trillion. Sixty-day delinquencies? Now at 3.22% and rising. Add in overdraft and NSF fees, and Americans paid $12.1 billion last year—more than ever.

Student loan stress is back, too. Nearly 8% of borrowers are now 90+ days delinquent since repayments resumed. Mortgage strain is growing—home prices are near record highs, sales are at 30-year lows, and rising insurance and taxes are squeezing households even more.

Consumers are turning to riskier credit. Buy Now, Pay Later services are booming, but 41% of users say they’ve missed a payment. These micro-loans are now part of credit reports, and banks are starting to treat frequent use as a distress signal.

Small businesses aren’t faring much better. Bankruptcy filings rose 13.1% year over year through Q1 2025, hitting over 529,000. Chapter 11 filings spiked 62% in May alone. Anecdotally, we’ve seen more stress and anxiety in our borrowers, which speaks volumes.

Even SBA-backed lending, which helped stabilize things in 2023 and 2024, is showing strain. Approvals are still strong, but delinquency rates are rising. The SBA 7(a) portfolio is seeing defaults near 3.7%—the highest since 2012. The SBA 504 program remains better, with defaults typically under 1%, but we’re seeing more red flags than usual across our own portfolio.

This isn’t a temporary blip. It’s a widening crack. Consumers and small business owners are doing everything they can to stay afloat—while Wall Street trades like it’s the Roaring Twenties.

So What’s Going On?

This is what happens when hope outruns reality.

Wall Street is pricing in perfection—AI-powered productivity, tariff tailwinds, Sydney Sweeney endorsements, and a smooth landing from the Fed. It’s a fantasy cocktail of innovation, politics, and wishful thinking. All baked into prices that only go up—until they don’t.

Look deeper, and the cracks show. The Shiller P/E ratio—one of the best long-term valuation gauges—is hovering around 39. That’s higher than anything we’ve seen outside of 1929. That’s not a warning bell. That’s a fire alarm.

And yet the rally keeps going, fueled by money flowing into the same old places. Big tech. Large caps. The giants that don’t need help. Meanwhile, small businesses face higher costs, tighter credit, and shrinking margins. No bailout. No lifeline.

Part of the problem is leftover central bank liquidity. During COVID, massive injections of capital saved the markets—but they also warped the system. Now, rates are high, inflation pressure lingers, and yet the urge to rescue risk assets won’t go away. It’s a policy contradiction that keeps fueling the fire.

Then there’s the behavioral side. Retail investors chasing stories, not fundamentals. Meme stocks. AI hype. Reddit threads moving billions. That’s not investing. That’s gambling with better branding.

And here’s the real risk: when the cracks finally give, the pain rolls downhill. It always does. Hedge funds don’t miss meals. But small firms miss payroll. Families miss mortgage payments. That’s the real economy. And nobody’s pricing it in.

Something Has to Give

You can’t have record debt, rising delinquencies, soft demand, and runaway markets forever. Not without something snapping.

Will AI keep the rally going? Maybe. Will the Sydney Sweeney effect continue to boost ailing early-2000s fashion brands? Maybe. For a while. But watch the defaults. Watch the SBA numbers. Watch the bond market. If the money pulls back, the whole house of cards wobbles.

At B:Side, we work with real businesses every day. We see what the headlines miss. We don’t bet on narratives. We bet on people.

So while Wall Street’s dancing, we’re keeping our boots on the ground.

Because eventually, the music stops.