PremiumFrom AI To KO: BofA Says The Flight-To-Safety Has Become A Bubble Of Its Own
For three years, the question was when the AI bubble would pop. Now, thanks to the most violent rotation since the dotcom era, the market has managed to inflate a second bubble... in the stuff people buy to hide from the first one.
That is the counterintuitive takeaway from BofA's latest Global Equity Volatility Insights note, titled simply "Defensives can bubble too" (available to pro subs). After a week in which the Nasdaq and the SOX had their worst week since Liberation Day, and the VIX briefly ripped toward 22 on Friday, BofA's equity derivatives team (Benjamin Bowler, Nitin Saksena, Arjun Goyal and co.) ran the market through its Bubble Risk Indicator, and found that the frothiest readings in the US are no longer in semis. They are in healthcare and consumer staples.