Weekly Commentary: Recalling 1991

2026-02-14 03:45:31 ET

With risk aversion gathering momentum, deleveraging looms.

"US Financial Shares Extend Selloff on Continued AI Concerns." "US Brokerage Shares Slide in Latest Sell-off Driven by New AI Tool." "Wealth Manager Stocks Sink as Investors Flee AI's Next Casualty." "Insurance Broker Stocks Plunge as New App Sparks AI Risk Fears." "AI 'Scare Trade' Hits Real Estate Stocks." "Real Estate Services Stocks Sink in Latest 'AI Scare Trade'." "Tech Rout Intensifies As Angst Over AI Deepens." "Biotech Contractors Extend Slump Amid AI Fears, Weak Earnings." "Logistics Stocks Sink on AI Fear Trade." "AI Panic Hits Trucking, Transport Stocks." "Stocks Have Few Pockets of Calm Amid AI Worries." "Wall Street's New Trade is Dumping Stocks in AI's Crosshairs."

February 13 - Bloomberg (Carmen Reinicke): "For three years, AI was the stock market's savior. Suddenly, it's become a marauder, and virtually no corner of the equity market looks safe from its impact. Just in the past 10 days, investors have delivered swift routs to companies toiling in industries as disparate as logistics, real estate, software, private credit, insurance and wealth management. In each case, the release of a new artificial intelligence tool, most famously from Anthropic PBC but also from small, lesser-known startups, prompted a rapid reassessment of business prospects… 'All we have done and seen in the past few weeks is the market torch the perceived AI losers. Obviously the definition of AI losers is changing almost daily to the point where you can't track it via themes or baskets,' said David Wagner, portfolio manager at Aptus Capital Advisors. The one constant is that AI applications have become the market's bogeyman, capable of erasing billions in value in a matter of hours as investors question the very viability of large swaths of the corporate landscape… 'The perception is spreading like a wildfire, and it's spreading horizontally,' Joseph Shaposhnik, portfolio manager at Rainwater Equity, said. 'In other words, it was once confined to a particular sector, and now it's spreading across sectors, the fear of the risk'."

For starters, the "AI scare" is a catalyst exposing underlying market fragility. In a robust market environment, we would not see such a proliferation of individual stock and sector blowups. It's become a minefield out there. And it's the type of market vulnerability consistent with incipient financial conditions tightening. With deleveraging rocking crypto and gaining momentum in Big Tech, we're on watch for waning liquidity and tightened conditions....

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