AI-Summary – News For Tomorrow
Investors in risky stocks are watching for exits, with a potential unwind of high beta/low volatility trades signaled by outperformance in low volatility sectors. Citi’s strategist notes the “Magnificent Seven” stocks are diverging, potentially concentrating asset flow into Nvidia, Alphabet, and Apple. Elsewhere, AI spending is increasing credit risks for companies like Oracle, indicated by a tripling of its credit default swap price. The Globe Investor highlights AI bubble concerns, Northland Power’s growth focus, and insights on private equity. Key market updates, analyst actions, and insider trades are also available on the Inside the Market page.
News summary provided by Gemini AI.
Outlook
Investors in risky stocks have one eye on the exits
Mr. Bassi’s framing of his unease, in terms of the pair trade, is interesting. The potential unwind of the long high beta/short low vol involves both selling of high-risk stocks and the buying of low volatility companies in sectors like consumer staples, health care and utilities. This makes it easy for us to follow the potential trend as drastic outperformance of low volatility sectors amid overall selling would make the unwind obvious.
To make matters potentially even wobblier, Citi’s top U.S. equity strategist Scott Chronert described the virtual end of the Magnificent Seven in a Friday research report. The seven stocks are no longer moving together – Nvidia and Google have pulled away from Meta Platforms, Tesla and Amazon.com. The potential problem here is that assets will all flow into three companies instead of seven: Nvidia and Alphabet and potentially Apple Inc.
Economy
U.S. growth even more important than usual for markets
Diversions
Conspiracy-minded have lower knowledge base
The essentials
Looking for our updates on market movers, analyst actions, stock technicals, insider trades and other daily, weekly and monthly insight? Click here to visit our Inside the Market page.
Globe Investor highlights
The Globe’s Joe Castaldo does a deep dive into the AI bubble, and how it may pop
Northland Power has traded the size of its dividend for the promise of growth. David Berman sees a possible investment opportunity
Tom Bradley sees a lot of reasons not to cheer for private equity coming to the investing masses
Ken Fisher answers some key questions from investors right now
Quick hits
Oracle Corp., thanks to debt funded AI-related spending, has seen the cost of its five-year credit default swap triple since the end of June (.3682 per cent to 1.1086 per cent). If I have to keep following CDS prices my financial crisis-related PTSD is going to kick in.
See our full earnings and economic calendar here
