Incoming Fed governor wanted to establish credibility, statements interpreted as hawkish. Trump quiet on rate hikes — this is to calm bond markets. Real inflation trending down. Oil started year with surplus, well-behaved, not at $150 because inventories drawn down. If Middle East sorted quickly, back to excess supply. Inflation trends down automatically. Market not sure if beyond one cut.

This cools off currencies, as seen in JPY depreciation.

AI rally should take a breather. Performance led by semis (Micron, SK Hynix, Samsung). Optically cheap on earnings but earnings up 10x; when supply comes in 2-3 years, earnings readjusted. Next 6 months: people look at Mag7 capex commitment. Microsoft's Bill Gates talked about AI data center capex going from $30B to $200B. If Mag7 says capex doesn't justify ROI and move tokens to Chinese/others, that cools AI trade. Opportunity in underperforming parts of market.

Mag7 has underperformed. Watch Microsoft closely for capex signals. Base case: capex maintained or moved up. Anything negative impacts stocks.

Mag7 started tapping bond markets. Bullish argument: unlevered balance sheets. But bond markets can only take so much paper — $300-400B from this set, appetite gets impacted. Capex numbers moving up: close to $1T by end of this year, next year ~$1.3T. Token spend plateaued since May. Interesting quarter to hear if any companies look to fine-tune capex.

AI is for real. Pullbacks of 20-30% possible but not 60-70% like 2000 or 2007. Not sitting on previous cycle excesses. 20-30% pullbacks and time correction very much on the cards.

Parts of market have excesses but not systemic bubble.