Shvets: Economy "Dead and Alive at Same Time," A.I. Bubble Forming

Central Bank Insights - Central banks, including the Federal Reserve, ECB, and Bank of England, are experiencing significant internal disagreements regarding monetary policy due to a lack of visibility on economic conditions [3][10]. - The Bank of England has shown a notable split in decision-making, while the ECB appears more optimistic about growth and the resilience of the European economy [4][5]. Economic Indicators - The U.S. jobs report indicates a mixed picture, with the U6 underemployment rate at 8.7%, the highest since August 2021, suggesting challenges in the labor market [7]. - The Consumer Price Index (CPI) data is influenced heavily by shelter costs, raising questions about its reliability due to missing data from previous months [8][9]. Market Dynamics - There is a notable rebound in technology stocks, particularly driven by Micron, despite recent pullbacks and concerns about valuations in the AI sector [12][13]. - Companies are facing escalating expenditures and are increasingly borrowing, which may indicate signs of a bubble in the market, although it is suggested that the bubble may not burst until later than 2026 [14][16]. Investment Sentiment - Current market conditions reflect a lack of visibility and trust among investors, with concerns about potential profit-taking and rotation into different market segments [13][14]. - The overall investment landscape is still under control, with leverage not posing significant danger at this stage of the market evolution [16].