1. Bonds turn to safe haven as AI trade cracks.

Bonds are benefiting from the tech rout, driving yields lower and giving a further lift to rate-sensitive stocks.
Below: The European 10 year yield

2. South Korea and Taiwan’s exports currently give little sign that the investment cycle is slowing down.

Where a pervasive capex problem should definitively show up early is in the export data of South Korea and Taiwan. One of the earliest indicators that earnings were about to markedly increase earlier this year was rising exports from these countries.

Below: Rising exports of chipmakers point to higher US GDP.

3. Neither is there any sign of a slowdown in the revenue growth to harm the overall AI trade.

GPU rental prices keep rising, even for previous-generation H100 chips. That points to robust demand for compute and eases fears of rapid depreciation.
This season looks set to confirm AI momentum is intact, suggesting pre-earnings tech selloffs may set the stage for a stronger rebound once the results are in.

So far, this correction is only about financing, not demand.

4. Blackrock cuts US stocks to “neutral” and turns bullish on US Treasuries.

The shift comes from a note by the BlackRock Investment Institute and CIO Rick Rieder.
Short-term Treasuries: up to overweight.
Long-term Treasuries: up to neutral from underweight.
US stocks: down to neutral from a long-held overweight.
BlackRock says it is still bullish on AI and calls the stock cut short-term risk management: "We are managing near-term risk, not changing our core convictions."

5. We like European utilities as a strategic play on the AI power bottleneck.

Although they have been underperforming since April (due to higher rates), the low valuations and high dividends make the sector a defensive AI trade.
Below: European utilities have held up with the S&P for the last two years.

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