Barclays strategist Alexander Altmann warns that the recent rebound in U.S. stocks may not last, pointing to the ongoing crypto slump among several weak market signals. Barclays models also show volatility-control funds could dump as much as $135 billion of U.S. equity futures.
Barclays strategist Alexander Altmann warns that the recent rebound in U.S. stocks may be short-lived, and that another sell-off could follow for crypto. Altmann is the global head of equities tactical strategies at Barclays.
Why Altmann doubts the rebound
He is somewhat skeptical of the rebound after the sell-off that also dragged cryptocurrencies lower. He lists negative market breadth, mediocre growth stock performance, a modest rebound in neocloud stocks, the ongoing crypto slump and a flat quality factor as warning signs.
However, his concerns arrive amid growing worries that the AI investment frenzy, a key driver of U.S. equity performance, may not be sustainable. Altmann was also one of the few Wall Street experts who questioned whether the U.S. midterm elections would bring lasting benefits to stocks.
Volatility-control funds add selling risk
Barclays has flagged that strategies sensitive to volatility could help worsen the decline. According to Barclays models cited in Bloomberg's report, volatility-control funds may dump as much as $135 billion of U.S. equity futures in the 24 to 48 hours after Thursday's market mayhem.
On the Oct. 29 episode of Bloomberg's Odd Lots podcast, Altmann argued that investors are in a "denial phase" about the risks to the AI sector. He pointed to growing financing pressure on neocloud companies, which host computing resources for AI applications, as a sign of early stress in the industry.
Source: U.Today
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