04 Dec 2025 23:17:24 ET │ 51 pages Vi e w p o i n t | Global Asset Allocation House Views for 2026 – No pAIn, No gAIn CITI'S TAKE Our economists suggest a Goldilocks environment in 2026 of decent global growth, benign inflation, and continued but narrowing rate cuts. This is bullish for risk assets. The midterm elections may become a negative driver, but only in Q3. While we think that we are in a bubble in US equities, bubbles are initially quite profitable, we stay long equities (US, China). But hedges ar ...

As the year winds down, finance pros are scanning the horizon for signals of what 2026 may hold. Apollo chief economist Torsten Sløk sees five risks to markets and the economy. He thinks the US economy will likely reaccelerate, potentially stoking fresh inflation. 'Tis the season for year-ahead outlooks on Wall Street as 2025 winds down, and Apollo Global Management's top economist is eyeing a handful of key risks to the outlook for markets and the economy. Torsten Sløk, chief economist at Apollo ...

Group 1: AI Stocks and Market Sentiment - Concerns about an impending AI 'bubble' have negatively impacted sentiment towards AI stocks, leading to adverse price movements [1][10] - Despite NVIDIA's record-breaking Q3 results, skepticism remains prevalent, as the stock faced pressure post-earnings [1][10] - The AI sector continues to dominate market discussions, with mixed opinions on its sustainability and valuation [10] Group 2: American Express (AXP) - American Express reported a double-beat on expectations, with adjusted EPS increasing by 19% and sales rising by 10% [3][4] - The company raised its sales and EPS outlook for the current year due to strong quarterly results, resulting in a positive stock reaction [3][4] - AXP achieved record quarterly sales of $18.4 billion, driven by successful launches of updated Platinum Cards and increased Card Member spending [4] Group 3: Caterpillar (CAT) - Caterpillar also posted a double-beat, with sales growing by 10% despite a slight decline in adjusted EPS [5][8] - The company demonstrated broad-based strength across its primary segments and reported operating cash flow of $3.7 billion, highlighting strong cash generation capabilities [5][8] - Caterpillar is recognized for its shareholder-friendly approach, being a Dividend Aristocrat, which supports its ability to pay dividends and accumulate cash [6]

An Nvidia Corp. GB300 NVL72 GPU on display at the Foxconn Technology Co. booth during the Computex conference in Taipei, Taiwan, on Tuesday, May 20, 2025. Computex kicked off Monday in Taipei, and as in years past will draw industry chieftains from Huang and Qualcomm Inc.'s Cristiano Amon to Young Liu of Foxconn, which makes the bulk of the world's iPhones and Nvidia servers. Photographer: Annabelle Chih/Bloomberg© 2025 Bloomberg Finance LPAmid all the speculation and handwringing about an imminent AI bubbl ...

Core Insights - The AI boom is significantly driven by Wall Street's investment in infrastructure, including data centers and computing facilities, rather than just consumer-facing technologies like chatbots [1][3] - There are concerns about over-investment and potential bubbles reminiscent of the early 2000s tech boom, as analysts warn of slowing returns [2][6] Investment Trends - Wall Street is increasingly financing large-scale AI data-center projects, with firms like Blue Owl Capital transitioning from traditional lending to providing $10 billion to $30 billion for AI infrastructure [4] - A notable example includes Blue Owl's $30 billion financing package for Meta's Louisiana data center, which involved $3 billion from its clients and additional borrowing [4] Market Dynamics - The demand for AI infrastructure is projected to reach nearly $3 trillion by 2028, with only about half of that expected to be funded by tech companies' cash flow, indicating a significant financing gap [5] - This gap has led to increased participation from private-credit firms, banks, and asset managers in AI infrastructure financing [5] Historical Context - Concerns about a potential bubble are heightened by historical parallels to the late-1990s telecom boom, where excessive investment was made based on anticipated demand that did not materialize [6] - Goldman Sachs CEO David Solomon highlighted the cyclical nature of technology investment, noting that excitement can lead to significant capital formation, but the growth trajectory may not be linear [7]

Anthropic CEO weighs in on AI bubble talk and risk-taking among competitors https://t.co/YhUtQ0eZYx ...

Core Insights - The CEO of a major tech company acknowledged that no firm will be immune if the AI bubble bursts, highlighting the current high valuations of AI stocks like Nvidia and Palantir, which have increased over 1,000% since 2023 [1][3] Group 1: AI Stock Performance - Nvidia is the leading provider of AI-accelerator chips essential for next-gen technologies, while Palantir specializes in AI-powered data analytics to enhance business efficiencies [2] - Palantir's market cap is around $400 billion, despite generating only $4 billion in annual revenue, indicating a steep valuation [4] - Palantir's stock trades at over 100 times sales and 390 times earnings, raising concerns about financial risks for investors [5] Group 2: Economic Conditions and Market Risks - A potential trigger for the AI bubble's burst could be a continued weakening of economic conditions, as consumers are reducing discretionary spending [6][7] - An MIT study revealed that 95% of generative AI investments have not yielded returns for companies, which may lead to rising costs and declining revenues [7] - The interconnectedness of big tech companies means that a slowdown in spending from hyperscalers could significantly impact the market [8] Group 3: Investment Strategies and Market Outlook - Investors may be tempted to shift towards tech stocks with low earnings multiples, such as Nvidia, which has a forward price-to-earnings multiple of 23 and a PEG ratio under 1.0 [9] - Analysts' projections for the tech sector are optimistic, but these forecasts can change rapidly if spending cuts occur, potentially making previously cheap stocks appear expensive [10][11] - Diversifying investments outside of tech could be crucial, as the disconnect between the tech sector and consumer behavior may lead to market corrections [13][14]

Group 1 - Assets linked to President Donald Trump and his family have underperformed the broader market, particularly in the crypto sector, where their ventures have seen significant declines [1][4][8] - Shares of Eric Trump's American Bitcoin (ABTC) dropped as much as 50% in early trading, closing down 39%, marking its lowest price since the announcement of Trump's involvement [2] - The native token of Trump-backed World Liberty Financial (WLFIUSD) has lost about 65% of its value since its record high in September, while meme coins $TRUMP and $MELANIA have lost approximately 90% from their all-time highs [5][8] Group 2 - Following President Trump's reelection, the premium associated with the Trump name has diminished, particularly affecting the family's crypto ventures [4][8] - Despite a recent rally in the broader crypto market, with Bitcoin surpassing $93,000, the Trump family's crypto-related assets continue to struggle [3][11] - Shares of Trump Media & Technology, the parent company of Truth Social, have lost about two-thirds of their value since the beginning of the year, hitting their lowest level since late 2021 [12]

Historical headwinds may prove insurmountable for Wall Street's hottest artificial intelligence (AI) stock in the new year.Roughly 30 years ago, the advent and mainstream proliferation of the internet began charting a new course for corporate America. It opened new doors for businesses to sell and market their products and services, while also breaking down information barriers that had previously existed on Wall Street between professional and retail investors.For decades, investors have been waiting (some ...

Core Insights - The recent advancements in AI models, particularly Google Gemini and Anthropic's Cloud, indicate an acceleration in AI progress, which is positive for the AI industry and companies like Nvidia [1] - OpenAI is expected to release a more efficient model in the coming months, leveraging the scaling techniques demonstrated by competitors [2] - The current AI market is not a bubble; instead, it is at the beginning of a multi-year demand acceleration phase [2][3] AI Model Advancements - Google Gemini and Anthropic's models have shown significant improvements in major benchmarks, suggesting a bullish outlook for AI adoption [1] - OpenAI is set to benefit from Nvidia's new NVL 72 AI server clusters, enhancing its model training capabilities [1] Market Valuation Comparison - AI stocks are currently trading at 25 to 30 times earnings, which are believed to be understated, contrasting sharply with the dot-com bubble where stocks traded at 100 times forward earnings [4] Data Center Buildout Cycle - The data center capacity leasing has seen an unprecedented increase, with more capacity leased in the September quarter than in the entire previous year [6] - Major hyperscalers, including Microsoft and Amazon, are planning to double their data center capacity over the next four quarters due to overwhelming demand [8] Investment Behavior - The investment behavior in AI is not reckless; companies are strategically building data center capacity in response to actual demand from startups and enterprises [8][9] - The Nvidia and OpenAI deal is still in the finalization stage, indicating that many anticipated investments have yet to materialize [9][10]