The rotation in stocks over the past month has been violent. Nvidia is a good example, losing nearly $1.5 trillion of market value since Oct. 6 while the equal weight S&P 500 gained 4% in the same period. The churn shows either incredible resilience or lack of true capitulation.
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Hedge funds had been growing at the fastest pace in more than a decade earlier this year, and have been leaning almost exclusively on prime brokers for leverage. Some great charts from @bespokeinvest:
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October marked the largest active unwinding of positions at stock-picking hedge funds in over a decade, with their market exposure down about 9% since June: Morgan Stanley. More than 40% of stock-picking funds were flat or negative this year through October.
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*Had been even this morning....before the market puked. Who's getting liquidated?
Hyperscalers are rallying amid speculation that political pressure will allow them to spend less, leaving them with positive free cash flow again. But it seems just as likely that they'll end up spending more to entice communities to let them build data centers...
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Hyperscalers are rallying amid speculation that political pressure will allow them to spend less, leaving them with positive free cash flow again. But it seems just as likely that they'll end up spending more to entice communities to let them build data centers...
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Citi's US economic surprise index is near the highest in three years.
As investors get increasingly nervous about the total amount of AI capex, they're demanding a greater premium to own tech debt. Spreads on tech debt are now the highest relative to those on other investment-grade bonds going back to 2003. h/t @DRBCurtis
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The gap between returns on the S&P 500's equal-weight and market cap-weight versions was the widest in October for any month since April 2009, as @johnauthers notes in his latest column.
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"Over the last two weeks we have seen episodes of sharp selloffs in tech stocks and the dollar at the same time. We have been arguing for a while that the risk-off properties of the dollar cannot be taken for granted in the event of an AI-driven correction in the market:" DB's George Saravelos
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Follow the free cash flow.....so far, tech companies that are maintaining positive free cash flow are being rewarded. Those that aren't are being punished. If today's premarket losses hold, Alphabet is poised to lose $397.6 billion of market valuation in one day.
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November is projected to be a record month for US investment-grade bond sales, with Bank of America forecasting $175 billion of issuance. That would be up 27% from November 2025.
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Concerns about Big Tech's capex plans are ballooning in tandem with these companies' spending ambitions. Key question for today's reports from MSFT & GOOG: what's the bar in markets for enough revenue/earnings to justify this increase in spend. A great chart from @drbcurtis.
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Credit spreads on all things AI are widening out enough to slow some AI projects: Apollo’s Torsten Slok. “Rates are maybe not important for AI but yields are important for AI:” Slok. “Credit markets are beginning to vote with their feet.”
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Jason Furman on AI vs human economists: If he were running the CEA today and had a choice between 20 highly qualified staff members “versus the AI systems that we have today, I would somewhat regretfully and sadly choose the AI systems.”
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You can see this even more in the gap between spreads on the lowest-rated investment-grade bonds and Caa rated corporate bonds, which is the widest since 2020.
The up-in-quality trade is alive and well. Investors are demanding the greatest amount of extra yield to own high-yield bonds over investment-grade bonds since right after liberation day in May 2025.
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The up-in-quality trade is alive and well. Investors are demanding the greatest amount of extra yield to own high-yield bonds over investment-grade bonds since right after liberation day in May 2025.
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Oil traders are increasingly pricing the battle over the Strait of Hormuz as the new normal. Futures contracts for brent crude in December 2027 are now close to $90 a barrel, the highest ever and a sharp departure from even a month ago.
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US economic data have increasingly been disappointing analyst expectations, with the Bloomberg US economic surprise index turning negative in the past few weeks. This is edifying concerns that consumers will soon run out of steam to keep spending as much as prices keep rising.
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Evidence of how leveraged the entire tech sector is to OpenAI & Anthropic: an FT story about OpenAI's revenue's being less than initially reported is spurring a more than 5% drop in Oracle shares, exacerbating losses from Nvidia and AMD to Microsoft
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Not a great day for the US Treasury to auction $39 billion of 10-year bonds, and yet here we are. It has become the big risk event of the day.
Global bond markets are on fire again today. The shock is radiating out from Europe to everyone globally. The epicenter of what's happening is France, but Italy, the UK and Spain are also under pressure. Safe havens like Switzerland are getting bought...
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