Macro regime shifts driving rotations, AI leadership risks, and changing investor flows.
Rotations, Regimes, and AI Risk
Markets are showing signs of a shifting macro regime: US equities periodically defy global sell-offs even as analysts warn of a ‘great rotation’ out of stocks, waning risk appetite, and elevated dispersion that could trigger mechanical reversals. AI-linked trades sit at the center of this tension, with some seeing an ‘AI scare’ that could accelerate declines while others note record highs as AI concerns ease and leadership broadens. Institutional research from BlackRock, macro education pieces, and analysis of the Fed’s balance sheet all argue that static asset allocation and simple liquidity stories are no longer enough, pushing investors toward dynamic, regime-aware positioning and more deliberate sector rotation strategies.