We’ve tracked the slowdown in consumer spending for some time.
We know that consumers have long blown through their pandemic-era excess savings. And that credit card balances and financial stress are higher than ever.
But now, with the latest earnings report, we have a new trend emerging.
It’s no longer a consumer economy. It’s an AI economy:
AI spending now exceeds consumer-driven growth.
For now, the contribution of AI to the economy is still a fraction of overall consumer spending.
If this trend continues, it’s a sign that the market may further concentrate into the big tech names, which already trade at rich and lofty valuations.
~ Addison
P.S.: We know when stocks are overvalued – and we’re aware that an overvalued stock can continue going even higher.
But this time of year, markets are poised for a seasonal pullback – and many tech names will likely see some big swings lower in the coming weeks as earnings hype meets the reality of a slowing economy and renewed tariff and trade volatility.
Our most recent Grey Swan Trading Fraternity position, a trade opened yesterday on the back of hype, targets that kind of trade. But as today’s chart shows, we can’t be too bearish in the long-term just yet.
As always, your reader feedback is welcome: feedback@greyswanfraternity.
