The article highlights the tension between the optimism surrounding AI and the reality of rising real yields, suggesting that the high cost of capital could be detrimental to stock valuations. The situation has led to increased anxiety on Wall Street, as investors grapple with the potential monetary risks in the current economic climate.
Key takeaways:
- The trillion-dollar AI promise has been overshadowing a significant threat due to the Federal Reserve's hawkishness: rising real-world borrowing costs across Corporate America.
- Wall Street is now concerned about the monetary risk after Jerome Powell reiterated his determination to maintain a tight policy stance, triggering a sell-off in Big Tech and beyond.
- The higher cost of capital is proving detrimental to stock valuations, according to Nguyen.
- There is a risk that Powell may be overplaying optimism as real yields rise, as per Lyngen.