The AI Boom's Dirty Little Secret

Nobody is talking about liquidity

There have been plenty of explanations for the latest AI sell-off, but SocGen's Albert Edwards thinks the market is overlooking something important: liquidity. Excess liquidity has deteriorated sharply, and historically this has been a pretty good leading indicator for equities. The relationship is far from perfect, but the message is worth paying attention to. The liquidity backdrop is getting less friendly, just as the AI trade is starting to wobble.