00:00Now, U.S. stock futures are pointing higher again after a session which saw AI names lead a rebound on
00:06Wall Street.
00:06Let's bring in David Savage, Bloomberg MLive strategist.
00:11David, thank you for joining.
00:12So some positivity that we're seeing today when it comes to the futures picture,
00:17but still concerns over the sustainability of this AI rally.
00:21We saw Bank of America strategists warn that now may be the time to take profits.
00:26They actually sound red flags in the U.S. market.
00:31Could they be right?
00:34Hi, good morning.
00:36You know, they could be, of course.
00:37I think, you know, what we saw on Friday was a change in the volatility setup.
00:43Volatility, cross assets, where they look at treasuries, U.S. equities, FX has been benign and very supportive of the
00:51risk rally that we see in the U.S.
00:53On Friday, we did see a shift higher in the VIX, above 20, and that led to some, you know,
00:59really sharp sell-off on Friday.
01:01You know, Monday, we saw the VIX start to come down, settle back towards 18.
01:04And as you said, we saw, you know, the AI trade sort of pick back up.
01:08So, you know, ultimately, the trigger for the sell-off was a job support that was too strong.
01:16So, what we've seen on the bond market is yields moving higher, not just because inflation has been accelerating higher,
01:22but growth has been more resilient.
01:24So, you know, yes, if we see volatility start to really trend higher, that's going to hurt stocks.
01:29But, you know, the growth backdrop still remains quite supportive.
01:35And, look, we've been speaking about OpenAI's decision to file for an IPO, but also SpaceX, also Anthropic.
01:42How important is this AI listing grace, it seems, to the outlook of the market?
01:50I think it's very important, but not because of the direct impact of what these IPOs, you know, ultimately will
01:57do for the market, but it's really a test for the momentum trade we've seen.
02:01This has been, you know, a one-way in trade before Friday that went straight up.
02:06And so, you know, first up with SpaceX, it's going to be very quickly added into the NASDAQ, very popular
02:13indexes that are, you know, tracked by, you know, several large ETFs.
02:17And so it certainly will be a test in terms of market liquidity, but more importantly, I think it'll be
02:22a test for, you know, momentum, equity momentum in the U.S.,
02:26which has been such a huge driver of the gains we've seen year to date.
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