Watch this week’s video update here.
This week’s market movements highlighted increasing recession risks, with widening credit spreads and falling stock prices signaling rising uncertainty, particularly around ongoing tariff policies. While signs of a deep, employment-driven recession remain absent, investors, consumers, and businesses have become cautious, awaiting clearer policy guidance from the administration. Sentiment remains at depressed levels.
In this week’s video, I look more towards the future regime coming out of this policy induced fall. I examine how uncertainty stemming from the new administration’s policies, rapid competition, and intensifying geopolitical tension around the A.I. arms race is here to stay and how it is shaping a new macro regime. Over the next four years, investors will need to navigate profound shifts in global trade negotiations, security dynamics, and attempts to restructure debts and deficits. They will also need to navigate exponential change and competition from A.I. This environment of uncertainty is driving a rotation away from high-multiple tech stocks toward sectors with solid cash flows and reliable earnings, such as energy and healthcare. The ongoing battle between A.I. adoption and global competition, especially from China, will significantly reshape investor perceptions of value, complicating long-term decision-making.
- (00:00 – 01:11) Market showing increased signs of stress: Recession risk through asset moves is rising with credit having its worst month since 2022. The rally failed technical resistance on tariff fears, and AI buildout concerns. The macro regime is shifting toward more uncertainty, driven by long-term policies around tariffs and AI.
- (02:17 – 03:22) Market rotation & political pressure: Tech valuations are compressing despite strong revenues. The administration appears to prefer markets not moving higher, using tariffs as both negotiation and control tools.
- (04:23 – 07:30) AI hype fading, consumer weakening: Speculative AI trades (e.g., Nvidia, hyperscalers) are losing momentum amid global competition, especially from China. Consumer confidence is falling, and Atlanta Fed GDP forecasts dropped to -2.8% for Q1.
- (09:13 – 10:17) Recession signals building: S&P 500 is now showing a negative 6-month return. Credit spreads (OAS) are widening quickly. These two show the recession risk in assets. Jobless claims haven’t spiked yet.
- (11:12 – 13:24) Trade war fears rising: Markets are behaving as if a trade war is imminent. Sentiment toward stocks is at bear market levels. Without a positive White House catalyst upside is limited and more downside risk is expected..
- (14:56 – 17:57) Uncertainty is global & structural: The broad market rotation continues but the leaders are showing a loss of momentum. If credit continues to weaken, fears of a global slowdown will rise, with significant downside in mega-cap tech stocks (Mag 7).
- (18:59 – 21:29) AI buildout vs valuation discipline: The AI buildout is real but faces valuation concerns on how long it will last. Future competition (esp. from China) and uncertainties around what is actually needed make investing in current high-multiple names more questionable.
- (22:34 – 26:23) Structural energy demand shift: Global energy demand is surging post-ChatGPT era. The buildout of compute and data centers is massive. AI will enhance energy efficiency but requires massive up-front investment.
- (28:32 – 34:57) New regime favors boring sectors: Multiples are compressing. Healthcare, energy, and hardware stocks like Cisco and McKesson are outperforming while speculative tech underperforms. Investors are moving away from high-multiple software to tangible, earnings-driven sectors.
- (35:54 – End) Bitcoin as a moat: Bitcoin has outperformed tech and is seen as the only true moat among tech assets. Stablecoins will enhance Bitcoin’s network effects in 2025. If looking to buy into the current weakness, Bitcoin is favored over tech stocks.
Please find the video here: https://youtu.be/2i9aEYysplo
Jordi Visser
