Flow and Positioning Observations

The market is shifting from indiscriminate AI momentum to a phase of intense scrutiny regarding hyperscaler capital expenditure and realized investment returns. Increased volatility, driven by high investor leverage in ETFs, is testing the durability of current tech-led rallies.

Key Takeaways

• 1.The market is transitioning from a 'build everything' AI phase to a 'prove the returns' phase, putting pressure on hyperscaler valuations.
• 2.Leverage and positioning in the AI complex are at historical extremes, amplifying volatility as demonstrated by recent Korean equity market dynamics.
• 3.Realized volatility has increased due to a local build-up in investor leverage, particularly in 3x levered ETFs.

Table of Contents

• GS flow and positioning observations
• Tony Pasquariello – GS global head hedge fund coverage
• Lee Coppersmith – Derivatives NY

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