1. Tsunami hits the Nasdaq.

"The market's moving from the promise of AI to the price of AI," said Ted Parkhill, founder and CEO of Incline Investment Management.
"There's no question that AI is going to be transformative for the world in the long run. But that doesn't mean every AI-related stock is currently priced appropriately. There's going to be a lot of turmoil."
"Investors had already begun to question whether all the copious AI spending would reap sufficient returns to justify billions in debt and equity capital.”
"When a group of stocks is heavily owned, priced to perfection, and critical to the bull market's thesis, there is not much room for error if their fundamentals appear threatened.”
"After damage like the sort we've been facing, it is difficult to think that we simply can bounce from here. “

Below: “We may be oversold in the short term, but the underlying questions and causes can't simply be wiped away."

2. "On a typical sell-off, “retail” buys the dip. Today, that bid has effectively disappeared.”

Elon Musk stocks (SPCX and TSLA) plunged but the damage was widespread and even Nvidia fell 9%.
"It's quite possible this could be a significant turning point for the US market ... I think a lot of the bigger players in the US have declared, in last night's action, that the music has stopped. It's game over."

3. Expect more rotation from growth into value.

The AI story was all about growth. Investors are going to move on to healthy cash flow companies.
That handoff from growth investors to value investors may take some time because a lot of these growth stocks aren't exactly cheap yet.

Below: Nasdaq100 versus ETF US Value (blue) year-to-date

4. JPMorgan getting bullish on China.

“We see room for a further 10-15% rebound as valuations recover from trough levels. Additional policy stimulus could extend the rally further.
As debate over the global AI trade intensifies, China could benefit from short covering and a rotation of flows, having served as a funding short against long AI positions.
Chinese equities also offer diversification from the global AI trade, while China’s AI localization has its own trajectory and could prove less dependent on US AI capex.”
In yesterday’s panic selling, Tencent and Alibaba were up.

Below: Chinese ETFs daily inflows have picked up notably since October

5. European earnings growth is coming in ahead of the US.

Both are tracking above initial consensus expectations, but the weaker Euro has also helped the relative sales beats in Europe vs the US.

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