The shift from active to passive funds, which some commentators see as a potential bubble driver, is not seen as a significant factor by Capital Economics. The firm also dismissed concerns about a bubble in AI stocks, despite recent gains in several major names. Wedbush's Dan Ives also argued that the interest in AI is not a bubble, but the start of an "AI Revolution."
Key takeaways:
- The latest stock market surge is not reflecting any obvious signs of "high and rising leverage," unlike past bubbles, according to Capital Economics.
- The amount of margin debt relative to the size of the stock market is smaller than in past bubbles, and has actually declined recently.
- Capital Economics does not see the shift from active to passive funds as a driver of a potential bubble in the overall stock market.
- Despite recent gains in AI stocks, some analysts do not believe this is a bubble, but rather the start of an AI revolution.