Daily Newsletter 11/13/25

US financial markets are starting the morning cautiously, with stocks pulling back after recent gains. Investors remain focused on interest rate expectations, the recent resolution of the government shutdown, and shifting sector trends as technology shares weaken while other sectors like healthcare and financials gain ground. Market participants are watchful as volatility and mixed economic signals continue to influence sentiment.

We see concerns about an AI bubble steadily increasing, as uncertainty grows over the sustainability of artificial intelligence-driven valuations. META is navigating internal challenges, while NVDA has experienced significant share sales by SoftBank, adding to the cautious mood. Additionally, circular financing in the AI sector continues to accelerate day by day. Against this backdrop, we are monitoring sector risks carefully and adjusting our approach as market conditions shift.

Here is another potential issue we see in the markets: Valuations are currently stretched, with stock prices trading well above long-term averages, particularly concentrated in a few large tech companies. This fragility means even a small setback in earnings or a policy surprise could trigger notable volatility. Additionally, credit card delinquencies have reached their highest point in over a decade, signaling pressure on household finances, while inflation remains stubbornly high, causing the Federal Reserve to delay interest rate cuts. Borrowing costs remain elevated, squeezing corporate margins and consumer budgets, which raises concerns about slower growth and a challenging environment ahead. These factors together create a delicate balance, contributing to the cautious market sentiment we observe today.

We are not bearish on the overall market; however, we anticipate experiencing some fluctuations until there is greater clarity and the transition from quantitative tightening (QT) to quantitative easing (QE) is fully completed. These transitional phases typically involve navigating through several waves of market volatility.

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