Volatility Is Now a Feature, Not a Bug: 3-Minutes MLIV

Summary

Mark Cudmore discusses Asian market price action, driven by Samsung buyback speculation, and the anticipation of Micron earnings. He argues the recent chip selloff is not the AI bubble bursting, but a volatile end-stage with more upside to come from the ongoing AI CapEx bubble, while warning the bubble will eventually burst. Volatility is seen as a feature due to heavy retail participation that skews returns positively.

• Asian stocks ended in a range, with a Samsung buyback-driven bounce but overall unimpressive price action
• Micron earnings tonight expected to inject further volatility
• Retail participation makes volatility a feature, not a bug, in a market where central banks and US administration are perceived to support stocks
• Mark Cudmore disputes that froth removal is healthy; calls it a volatile end-stage similar to 1999 and the 2008 GFC, estimated about six months
• He believes a massive AI CapEx bubble has not burst yet and will keep inflating, offering more upside in the near term
• Current selloff not exhausted yet, but the larger bubble bursting is still ahead