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By Michael Msika, Bloomberg markets live reporter and strategist
Bullish equity investors have embraced a Goldilocks scenario, driving risk-on sentiment to the point where it’s harder to identify what will trigger the next leg higher.
Semiconductors have slipped into a technical correction, volatility has exploded and positioning remains crowded—but investors still aren't ready to call the top. The charts reveal a market caught between exhaustion and one last push higher.
Industrials have become an unexpected second-order AI winner, as data-center spending boosts demand for power and infrastructure. Despite rich valuations, positioning is at multi-year lows, raising the question of whether the recent pullback is a buying opportunity.
The AI story is becoming a financing story, as bond investors grow more cautious despite rising hyperscaler capex. If credit conditions keep tightening, the impact could extend well beyond the bond market into AI equities.
Semiconductor sentiment has flipped from euphoria to panic, with Dot-com-era volatility fueling fears that the AI trade is fading. Yet fundamentals remain strong—record cash flow, solid earnings and cheaper valuations suggest this looks more like a correction than the end of the cycle.
Paris did not burn. The streets stayed calm after France's victory, but investors have far less to celebrate as weak growth, rising bond yields and political uncertainty continue to weigh on the French outlook.