James Brodie
Head of Learning & Development, Flux
US Consumer Confidence, AI Bubble, International Equity Funds
Confidence rises as rate cuts loom; credit fears AI bubble, equities stall, global inflows surge, delinquencies climb.
US consumer confidence jumps to 91.2 from an upwardly revised 89 last month on more upbeat prospects for the economy, job market and incomes.
Meanwhile the OIS prices 54bp cuts by year end with the 2-year yield caught between stronger than expected economic data and AI deflationary fears. The break will be aggressive (Chart 1, Bloomberg)
Credit always leads equities (Chart 1, Bloomberg, @Convertbond)
An AI bubble tops credit investors' list of worries for the first time ever, according to the BoA survey. Investors now expecting $285 billion of debt issuance from hyperscalers this year (up from expectations of $210bn in Dec.)
It feels like something is breaking but nothing has broken. Largest net equity selling since Liberation Day, yet we have the tightest 2-month S&P range in decades. The market is long semiconductor stocks and short software. Tension this extreme rarely resolves quietly.
And while Software stocks have lost a third of their value since the end of October, Blackstone is now down 40% from the highs.
Meanwhile International equity funds attracted +$17 billion in net inflows last week, the 2nd-highest on record. This is more than DOUBLE the average seen in 2025. This was particularly driven by South Korean funds, followed by Japan. Investors poured +$18 billion into Korea
Meta has agreed to a deal with AMD to buy over $100 billion worth of AI computing power and potentially a ~10% stake in the company. AMD stock rallies +9% on the news.
The share of U.S. loans in delinquency has hit its highest level since 2017, according to Bloomberg.
Data today : Nvidia earnings, US mortgage applications
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