NewsNTech
A portfolio running concentrated AI exposure moved more defensive last week, initiating positions in defensive stocks to offset those holdings. Oil prices and Treasury yields both climbed in the period.
Wall Street, per the account, has raised the performance bar for AI stocks, and that tighter standard drove the decision to hedge.
The rate mechanism behind the move The constraint for AI stocks right now is the discount rate.
Treasury yields set the floor against which equity cash flows are valued, and when they rise, the math of discounted future earnings turns unfavorable faster for growth stocks than for anything else.
Keep reading