Investors Weigh Macro Risks as AI Anxiety Rises

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00:00FUD, fear, uncertainty, doubt, is that what is ripping through the markets?

00:04Clearly. Yeah, yesterday was certainly eye-opening with the action in the markets,

00:09and it shows investors are nervous. We've seen it pretty much this whole month,

00:14and then yesterday really was clear that this sell-off has more legs. And big parts of the

00:21market are in a correction. NVIDIA now down 17% from its high. You were talking earlier about

00:27Oracle. That's down 40%. And you're seeing investors are getting more defensive. You're seeing sectors

00:33like utilities, pharmaceuticals outperforming the growth parts of the market. And so this could

00:40continue, right? As we get through the end of the year, you do see rebalancing, tax selling. And that

00:48could continue as we need a little more clarity, a little more confidence to come into the market to

00:53get the growth trade back heading up. What more clarity could you wish for?

01:00We got a relative amount of clarity coming from the world's most valuable company. Jensen Wang doing

01:04his best to try and make clear the line of sight he has on future revenues. People questioning maybe

01:10the inventory buildup now. But we did get a lot of tangible evidence there. We had people such as

01:16Michael Burry saying, who are the auditors on OpenAI? And yes, there was a lot of anxiety in the private

01:21markets. But many have pushed back on that sort of concern. What clarity do you want to see, Eric?

01:27Yeah, no, you bring up three points. I think, right, it's a valuation issue. And right now,

01:32investors are weighing what's the value of these names. They're not clearly sold that the growth can

01:39continue. Even though you look at the analyst community, you look at NVIDIA, the average price

01:44target is 250. That's a 30-plus percent move from these levels. So you would think at these prices,

01:51it's pretty attractive. So a lot of this is, again, you know, just market reaction going through

01:59kind of a correction phase. And I think the buyers will come back in. It's always unclear when and at

02:04what levels. But I do see the buying coming back into the markets.

02:07It's an element of catch a falling life. But is the Fed the key question if rates are indeed cut

02:13in December? Yeah, the Fed adds a level of confidence to investors. And investors clearly

02:20want to see the Fed is taking action that's positive for the economy. And that right now is clearly with

02:27rate cuts. And so a rate cut would, in my view, bring in confidence to the markets and should help

02:33equities, especially growth equities. Growth equities typically do well as rates come down.

02:39And so that would be a big boost next month. Some of these particular numbers that I relate to on a

02:47weekly basis do look really ugly. As I say, NASDAQ, worst week since April. NVIDIA, worst week since

02:53about April. And you see a similar thing for Oracle, worst week, in fact, since 2018. But looking at a

02:58year-to-date basis, we're still in a pretty great spot, right, Eric? Oh, absolutely. Yeah. I mean,

03:04the S&P is still up north of 10%. Overseas markets have had an incredible year up, you know, across

03:11the board, north of 20%. So investors, right, they have to step back and be patient and be calm and

03:16actually look at these sell-offs as an opportunity. Because this is where you can make solid returns,

03:22right, by great companies at lower levels. I mean, that's the key to investing and not panicking

03:27and not selling when everyone else is selling and take losses and hurt yourself long term.

03:32Eric, your thesis with AI, do you think it's a bubble? Or do you think this is the sort of

03:38capital expenditure that's necessary to reap the productivity in the future?

03:43You know, the numbers you're seeing committed to this space is certainly eye-opening and nervous.

03:49And it seems like it's a few of the big, you know, massive players in that space. And so it does,

03:53it does bring concern. On the other hand, without a doubt, with these earnings results we've seen,

04:00you know, just from NVIDIA, and you saw from Alphabet and the strength there, clearly AI,

04:07you have to be invested in it long term. It's the growth engine. And so if you want growth,

04:14AI is the place you want to be.

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