Macro Guru Raoul Pal Says Fresh GameStop-Led Meme Stock Frenzy Has Nothing To Do With Interest Rates: 'Clock Is Ticking On The 25-40-Year-Olds'

The meme stock frenzy reignited on Wall Street this week, fueled by the return of “Roaring Kitty,” a key player in the 2021 surge. This resurgence sparked a discussion on the psychology driving these volatile investments, with economist and former hedge fund manager Raoul Pal offering his insights.

What Happened: A social media user took aim at traditional finance theories suggesting low interest rates caused the meme stock phenomenon surrounding GameStop Corp. GME. 

“One of the funniest things is tradfi assigning the GME/meme phenomena to low interest rates. Well guess what…interest rates are at multi-decade highs and they running it back again lmao,” the user said.

Pal agreed with this argument. “Yeah, its nothing to do with interest rates but the need for speculation to get ahead because of interest rates, debasement, jobs, etc,” he said. “The clock is ticking on the 25 to 40 year olds…”

See Also: Best Inflation Stocks

Why It Matters: The Fed funds rate, a key benchmark impacting borrowing costs, currently sits at a 22-year high of 5.25%-5.50%.

Pal’s point resonates with the current economic climate. The post-pandemic period has brought significant uncertainty, with inflation rising and the Fed raising rates to combat it. 

Companies struggling to grow revenue have resorted to layoffs, impacting personal finances.

Millennials, the first generation raised on the internet, are particularly affected by these financial anxieties. A 2023 Northwestern Mutual study revealed that 54% of respondents belonging to this category experience depression due to financial uncertainty, compared to 34% of the general population.

New Meme Wave: Amidst this backdrop, meme stocks like GameStop and AMC Entertainment Holdings, Inc. AMC have experienced a dramatic rise. So far this week, GameStop has gained 179% and AMC 135%, with trading halts interrupting the rallies. 

Before Monday, GameStop was down slightly for the year, while AMC was down a steeper 52%. The stocks closed Tuesday at $48.75 and $6.85, respectively, with whopping gains, according to data from Benzinga Pro.

Read Next: Jim Cramer Bets Cash-Strapped AMC, GameStop May Issue Shares To Capitalize On New Meme Stock Frenzy: ‘It Makes Too much Sense Not To’