BofA says AI excitement is eclipsing other investing opportunities

Economic

Summary:

BofA warns AI hype is eclipsing other investments, spotlighting undervalued stocks like Viking, McCormick, and Dollar General as overlooked opportunities amid the tech-driven market frenzy.

For every mega AI deal that has rolled through, lifting investor hopes that the AI transition is here to stay, there's a revival of jitters — whether it's chatter of an asset bubble, impatience for AI-fueled returns, or fears of ill-considered investments.

A robust earnings season has helped calm those worries, even as economic warning signs have started to pile up. Some observers have pointed to a broadening rally and the prospects of other sectors playing catch-up to the tech giants as reasons for optimism not directly tied to the fate of the AI trade.

Other analysts see an opportunity to zig while Wall Street zags. After all, it's a big market out there.

What if the market has been so focused on the growth of the AI industry and its offshoots — from chips to power plants — that investors are missing out on other opportunities? That's a question posed by a team of analysts at Bank of America this week, who also set out to identify companies that may be overlooked but don't trade like they are directly exposed to AI excitement.

Of the 16 names shortlisted by the analysts, which are Buy-rated, have below-market valuations, and are off their highs by 10% or more, several stood out for exemplifying key themes in the economy and the stock market. To be clear, these are not our stock picks. But BofA's exercise is an interesting one that helps to tell the story of the complete economy.

Viking (VIK) is the first of three we'll highlight here.

In the hospitality world, premium is the word of the day. From travel-focused credit cards to hotel lines, the play for the most affluent customers — the top of the K-shaped economy — is defining success for the industry's top brands.

The analysts chose to highlight the premium cruise line because "its differentiated, all-inclusive, destination focused product continues to set it apart from peers, driving superior financial performance." Viking boasts superior margins and growth compared to its more modestly priced competitors, they wrote, and the operator commands more than 50% market share in the river cruise category.

McCormick (MKC), the food company, is the next stock worth noting because of its potential for a tariff bounce-back. McCormick sources ingredients from over 85 countries, the analysts wrote, and the president's sweeping tariffs have in part pressured the stock.

Since most of McCormick's top spices cannot be sourced inside the US, the company may win an exemption from the tariffs that an industry group is advocating for. The seasoning maker also stands to gain if the Supreme Court rules that the tariffs are unconstitutional. What's more, McCormick is among the few packaged food companies showing organic sales and volume growth as firms struggle to keep up with shifting consumer tastes. (Flavor wins, folks.)

Finally, Dollar General (DG), a stock that is winning out as consumers trade down. Middle- and high-income earners are frequenting discount stores, looking for more affordable options as inflation continues to pressure the American consumer. Dollar General's core customers, the analysts note, are checking out with even bigger shopping carts, seeking cheaper goods and smaller pack sizes. The discount chain is also enjoying e-commerce success through same-day delivery service.

You won't find jaw-dropping investments here, but that's the point. The biggest beneficiaries of the AI trade may be obscuring opportunities elsewhere.

Source: finance.yahoo

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Adam

Commodity

Cryptocurrency

Gold (XAUUSD) has gained strength in recent sessions, breaking above the key $4,050 level and completing a bear trap formation. This move suggests renewed bullish momentum driven by rising investor demand and growing expectations for Federal Reserve rate cuts. As safe-haven flows intensify in response to economic uncertainty, gold’s stability stands out.

Meanwhile, Bitcoin (BTC) has rallied to $107,000 after repeatedly holding support near $100,000, a sign of easing liquidity pressures. While both assets benefit from dovish monetary signals, gold may be better positioned in the current macro environment. This is due to its lower volatility, historical safe-haven role, and favourable seasonal patterns.

Monetary Policy Outlook Supports Gold and Bitcoin

Markets are now pricing in a 65.6% chance of a 25-basis-point rate cut in December. This is driven by weakening economic data and soft inflation expectations. The chart below shows the 5-year inflation outlook from the University of Michigan survey. The inflation expectations eased to 3.6% in November but remain elevated at historically high levels.

Gold vs. Bitcoin: How Fed Cuts and Safe-Haven Demand May Boost XAUUSD_1

Meanwhile, Treasury yields are consolidating around 4.10%, awaiting fresh signals from upcoming BLS inflation reports.

Moreover, the Federal Reserve Governor Stephen Miran has reiterated his support for a 50-basis-point cut at the upcoming December 9–10 meeting. However, the elevated long-term inflation expectations at around 3.6% add pressure for a proactive Fed response.

Labour Market Weakness Adds to Fed Pressure

Due to the prolonged federal government shutdown, official job data has been disrupted. This marks the longest shutdown in history, resulting in a second consecutive missed BLS report. Meanwhile, alternative indicators present a mixed picture.

ADP employment change shows modest gains, but layoffs have surged to their highest since 2008.

Gold vs. Bitcoin: How Fed Cuts and Safe-Haven Demand May Boost XAUUSD_2

Moreover, the job openings continue to decline, and consumer confidence in the labour market has weakened.

Gold vs. Bitcoin: How Fed Cuts and Safe-Haven Demand May Boost XAUUSD_3

However, JP Morgan estimates a loss of 35,000 jobs in October, following a 52,000 gain in September. This reinforces signs of a softening economy.

Gold vs. Bitcoin: How Fed Cuts and Safe-Haven Demand May Boost XAUUSD_4

This weakening trend, coupled with rising layoffs and a softer dollar, increases the odds of monetary easing. This environment benefits gold and bitcoin, as investors seek safe-haven assets during periods of economic uncertainty and policy shifts.

Gold vs. Bitcoin – Ratio Breakout Signals Shift Toward Gold

The long-term outlook for gold and bitcoin can be analysed using the gold-to-bitcoin ratio. The chart below shows a breakout above a key resistance level from a descending channel. This breakout suggests that investment is shifting in favour of gold.

Historically, when this ratio peaked in August 2015, bitcoin bottomed, and gold began a strong rally. Similar patterns were observed in March 2020 and December 2022. The current breakout signals renewed interest in the gold market, suggesting that gold prices may continue to rise in the coming months.

Gold vs. Bitcoin: How Fed Cuts and Safe-Haven Demand May Boost XAUUSD_5

This is also supported by the daily chart of Bitcoin, which shows the formation of an ascending broadening wedge pattern, with a rounding top structure developing above the $ 100,000 level. Currently, the price is hovering near this pivotal $100K zone, and a break below it may trigger short-term selling pressure.

While the broader trend remains strongly bullish, increased volatility could lead to a corrective phase before the next leg of the upward move. On the upside, a breakout above $125K would likely signal the start of another substantial rally in Bitcoin prices.

Gold vs. Bitcoin: How Fed Cuts and Safe-Haven Demand May Boost XAUUSD_6

Despite intense volatility in the Bitcoin market, the gold market remains relatively stable. The gold price has maintained a bullish trend in 2024 and 2025. The price has repeatedly formed strong consolidation patterns before resuming its upward trend. The recent consolidation in October 2025 is a potential signal for the next leg up in early 2026.

Gold vs. Bitcoin: How Fed Cuts and Safe-Haven Demand May Boost XAUUSD_7

October and November are typically months of seasonal correction, while December and January are historically strong for gold. A breakout above the $4,400 level would confirm that the consolidation phase has ended. This breakout would also signal that the gold market is preparing for a move toward the $5,000 level.

Source: fxempire

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Justin

Cryptocurrency

A prominent Wall Street analyst has declared this the "best time ever" for asset owners as monetary policy shifts, massive technology spending, and potential fiscal stimulus converge.

Adam Kobeissi, founder of The Kobeissi Letter, made the bold assessment during an interview with investor Anthony Pompliano, arguing that rate cuts into stagflation, combined with unprecedented corporate spending, create ideal conditions for nominal asset appreciation.

His outlook extends across equities, real estate, and digital assets, including Bitcoin, which he projects could reach $200,000 within 12 to 24 months.

The analysis comes as the Federal Reserve navigates a massive split over monetary policy direction, with officials divided between addressing persistent inflation that exceeds 3% and supporting a weakening labor market where unemployment approaches 5%.

This internal division has complicated what initially appeared as a straightforward path toward continued rate cuts through year-end.

Fed Policy Split Creates Stagflation Scenario

The Federal Reserve faces its most significant internal divide during Jerome Powell's nearly eight-year tenure as chair.

Officials are divided over which threat poses the greater risk, persistent inflation or labor market deterioration, creating uncertainty surrounding the December rate decision.

While 10 of 19 officials initially penciled in cuts for both October and December when they agreed to a quarter-point reduction in September, hawkish resistance hardened after the late October cut, leaving the current range at 3.75%-4%.

The divide intensified during the recent government shutdown, which suspended the release of employment and inflation reports that typically help reconcile policy disagreements.

Hawks seized this data void to argue for a pause, citing steady consumer spending and business preparations for tariff-related price increases.

Meanwhile, doves worried about labor market softness lacked fresh evidence to maintain a strong case for continued cuts.

According to Wall Street Journal Fed reporter Nick Timiraos, the rupture stems from three unresolved questions:

Whether tariff-driven price increases prove temporary.
Whether falling payroll growth reflects weak labor demand or reduced immigration-related supply.
Whether current interest rates remain restrictive enough to warrant further cuts.

"People just have different risk tolerances," Powell said after the October meeting, explaining the disparate views within the committee.

Kobeissi Sees Perfect Storm for Asset Owners

Kobeissi's bullish thesis centers on what he describes as an unprecedented convergence of favorable conditions.

"This is the best economy all time for asset owners if you own stocks, real estate, gold, and bitcoin, these hard assets, this is the best economy for you. Look at S&P 100 up almost 40% since April," he said during the interview.

"On the flip side, ask a random person walking around New York City. Are we in recession? There's 50% of people who would say yes. So I think what's happening is the wealth gap in the U.S broad."

He emphasized the mathematical simplicity of his investment case, stating that "Rate Cuts Into Stagflation + $600B/yr in Mag 7 CapEx + $2,000 Tariff Stimulus Checks. Own assets or be left behind."

Notably, Kobeissi also highlights the Magnificent Seven tech companies that now spend over $100 billion per quarter on capital expenditures, representing approximately $600 billion annually.

"These seven companies are now around 40% of the S&P 500, I mean, in my view, you're taking a losing bet," he said.

Specifically, regarding Bitcoin, Kobeissi expressed confidence in the asset's trajectory despite recent volatility.

"I think if you're a bitcoin investor, which obviously you are, and anyone who has been at least watching this asset class, not even investing in it, you know that 20 to 30% downswing is almost like normal every single you know this could happen on any given month type of thing," he said.

"I still think all-time highs for bitcoin will probably see $200,000 bitcoin within the next 12 to 24 months. It's just going to be like I said that the best period of all time doesn't exist, and bitcoin is definitely one of the assets at the forefront of that push."

Source: Yahoo Finance

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Olivia Brooks

Cryptocurrency

Bitcoin's value witnessed a sharp drop during recent treasury bond discussions led by Bessent. Simultaneously, SEC Chairman Paul Atkins addressed which altcoins might be classified as securities. Despite this year's supportive crypto regulations, macroeconomic shifts have caused significant disruptions.

What Altcoins Escape the Securities Tag?

Under former SEC Chairman Gensler, all altcoins were deemed securities. However, with the new administration, this perspective shifted. Paul Atkins, the current SEC Chairman, is seen as favorable to crypto, suggesting many digital assets don't fall within SEC regulation. He has clarified that network tokens and meme coins aren't considered securities.

Atkins stressed that only those assets with explicit managerial commitments qualify as securities. He underscored that cryptocurrencies serving functional roles, such as tickets or memberships, don't fall under this classification.

How are Legal Terminologies Clarified?

Atkins proposed a token taxonomy based on the Howey investment contract analysis, acknowledging limitations within existing laws. This assessment is expected soon from the Commission.

According to Atkins, most crypto tokens in current circulation aren't securities. On occasion, a token can be part of a securities offering via an investment contract. This application aligns with established securities laws.

Existing securities regulations list instruments like stocks, notes, and bonds, with a broader category known as "investment contracts." This term refers to the relationship between parties, not a fixed label on a token.

Investment contracts are not perpetual and may expire despite the continued trading of the token on the blockchain. Some argue that if a token is linked to an investment contract, it remains a security indefinitely.

This misconception suggests all succeeding transactions are securities-related. Atkins finds this difficult to align with legal texts, Supreme Court rulings, or even practical reasoning.

"Not every transaction involving these tokens should be considered a securities transaction," Atkins reflected, highlighting a logical flaw in such interpretation.

Atkins' remarks underline a nuanced approach to crypto regulation, distinguishing between types of tokens and their inherent nature rather than applying a sweeping categorization. This underscores a broader regulatory shift, seeking to reconcile legal boundaries with the rapid innovation in cryptocurrency markets.

Source: CryptoSlate

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Adam

Economic

Stocks

U.S. stocks have been on a tear in recent years, largely on the back of euphoria around artificial intelligence. But not everyone has participated in the runup: Stock wealth has largely accrued to the wealthiest U.S. households.

Even with recent choppiness, the S&P 500 U.S. stock index is up about 16% over the past year. Total wealth from publicly traded stocks has risen by $8 trillion or so during that time, said Mark Zandi, chief economist at Moody’s.

The top 20% wealthiest U.S. households own nearly 93% of all stock — meaning they get the lion’s share of any stock market gains, according to calculations by Edward Nathan Wolff, an economics professor at New York University who studies income and wealth distribution.

“Stock ownership is still heavily concentrated among the rich — the very rich, in fact — and poor families have basically been left out of the picture,” Wolff said.

“As the stock market goes up, it really widens the wealth and income gap,” Wolff said. “It’s a big part of the inequality story.”

‘A huge, huge gap’

Of course, this isn’t to suggest that AI is the lone reason the stock market has risen, or that it alone is the source of the U.S. wealth gap.

But it exacerbates other tensions at play, and has implications for politics and the broad U.S. economy, Zandi said.

For one, a widening gulf between the haves and have-nots could create more “political fracturing,” making it harder to reach consensus, he said.

“They have different needs and perspectives, and therefore policy desires,” Zandi said. “You can feel it in our politics today — even in our ability to keep the government open.”

The dynamic also fuels a bifurcation in spending, he said. The U.S. economy is more reliant on the spending of a relatively small group — the wealthy — leaving it more vulnerable if “something were not to stick to script for that group,” Zandi said.

The top 1% owned half — or $25.6 trillion — of the total $51.2 trillion of corporate stock and mutual fund shares in the second quarter of 2025, according to the most recent Federal Reserve data. The average person in the top 1% has almost $37 million in net assets, Wolff said.

Meanwhile, the bottom 50% of households collectively held just 1% — or $540 billion — of that stock and mutual fund wealth.

“There’s a huge, huge gap,” said John Sabelhaus, senior fellow of economic studies at the Urban-Brookings Tax Policy Center and a former research official at the Board of Governors of the Federal Reserve System.

“Stock ownership is very low at the bottom of the income distribution,” he said.

AI isn’t the only boom affecting wealth

Much of stocks’ growth is attributable to the so-called AI boom.

The stocks of companies tied to artificial intelligence have accounted for roughly 75% of S&P 500 returns since ChatGPT launched in November 2022, Michael Cembalest, chairman of market and investment strategy for J.P. Morgan Asset Management, wrote on Sept. 24.

“AI stocks have gone stratospheric over the last three years,” Zandi said.

Even when lower-wealth households have stock, their holdings are relatively small, Wolff said.

For example, about a fifth of the poorest 20% of households own stock, he said. But just 5% own $10,000 or more, compared to nearly all of the richest households, he said.

Wolff analyzed data from the Federal Reserve’s triennial Survey of Consumer Finances. The analysis includes direct stock ownership, as well as stock held indirectly in sources like workplace retirement plans.

Households with less wealth don’t have the resources to save, and so can’t afford to buy as much stock, according to financial experts.

Meanwhile, the wealthy have more discretionary income and financial resources, and can afford to take more risk with their savings and investments, they said.

Despite the AI-driven stock market boom, the wealth gap has actually decreased for the middle class relative to the richest households due to a runup in housing prices, Wolff said.

“The housing market, at least until recently, has been booming,” he said.

For example, the 50th to 90th percentiles by wealth own about half — or, $23 trillion — of total real estate, according to Fed data.

Overall stock ownership among lower earners has increased slightly in recent years, a dynamic that tends to happen when stocks perform well, said Sabelhaus, citing Fed data.

There’s also been a push to make it easier for consumers of all wealth levels to invest, as apps and certain investments have lowered the barrier to entry.

‘Double-edged sword’ of stock ownership

And stock ownership is “always a double-edged sword,” said Sabelhaus of the Urban-Brookings Tax Policy Center. While the stock market’s value has historically increased over long periods of time, the wealthy bear more of the shorter-term financial risk if the market falls, he said.

Indeed, if AI demand were to “falter,” “we doubt non-tech firms would rescue the market,” James Reilly, senior markets economist at Capital Economics, wrote in a research note on Nov. 4.

Certain households, like those carrying a lot of high-interest debt or saving to buy a home, may be better off directing their money toward interest payments or a down payment instead of the stock market to minimize financial losses in the short term, Sabelhaus said.

“If someone said, ‘I make $50,000 a year, I have student loans and credit card debt, should I be investing in AI or crypto?’ I’d probably say no,” he said.

“I think in general it’s fair to say, if you can take on the risk, then you should take on that risk to enjoy the higher rate of return,” he added. “But it’s a trade-off.”

Source: cnbc

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Adam

Economic

The Goldman Sachs Group Inc. strategist who correctly predicted Wall Street’s underperformance this year expects US equities to keep lagging for the next decade.

Peter Oppenheimer and his team recommended that investors increase diversification beyond the US as elevated stock valuations put a lid on gains. They expect the S&P 500 to achieve annual returns of 6.5% in the coming 10 years, the weakest among all regions. Emerging markets are projected to be strongest, at 10.9% a year.

Goldman Strategists See US Stocks Lagging All Peers Next Decade_1

After a decade of constantly superior performance, driven by a surge in technology stocks and the craze for artificial intelligence, the S&P 500 has lagged behind global peers significantly this year. The benchmark has climbed 16%, compared with the 27% rally in a worldwide MSCI Inc. index that excludes the US.

“Diversify beyond the US, with a tilt toward emerging markets,” Oppenheimer and his team wrote in a note. “We expect higher nominal GDP growth and structural reforms to favor EM, while AI’s long-term benefits should be broad-based rather than confined to US technology.”

In the coming years, the strategists expect emerging-market gains to be driven by strong earnings growth in China and India. Asia excluding-Japan is seen as the second-best performer with a 10.3% annual return. Japan is set to achieve 8.2%, underpinned by earnings growth and policy-led improvements in investor payouts. Europe is expected to hand investors a 7.1% annual return.

Goldman Strategists See US Stocks Lagging All Peers Next Decade_2

Oppenheimer, Goldman’s chief global equity strategist, early last year warned that US stocks were starting to look too expensive and began advocating for a shift into long-lagging international markets.

The S&P 500 is trailing most regions in dollar terms in 2025, with earnings growth expected to converge globally next year, leaving the benchmark looking less attractive. Its forward price-to-earnings ratio has surged to 23, equivalent to the post-pandemic peak and within reach of the record hit prior to the dot-com bubble.

The US index now trades at a premium of more than 50% to global peers. The drivers that pushed S&P 500 prices and earnings higher in the past decade, such as rising margins, lower taxes and low interest rates, are unlikely to be as strong in the coming 10 years, the Goldman team said.

Goldman Strategists See US Stocks Lagging All Peers Next Decade_3

“The S&P 500 net profit margin and ROE currently stand near record highs, and many of the tailwinds to corporate profitability in recent decades are unlikely to boost profits to a similar extent going forward,” the strategists said.

Source: Bloomberg

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Adam

Cryptocurrency

Crypto markets are experiencing a tentative recovery after last week's broad financial market decline, though analysts caution the rebound may be short-lived as significant macroeconomic risks persist.

The recent bounce followed a Senate vote last Sunday advancing a bill to reopen the U.S. government, sparking synchronized gains across crypto, gold, and equities.

Market sentiment reflects this optimism, with users of prediction market Myriad, owned by Decrypt's parent company Dastan, assigning a 96% chance to the shutdown ending before November 15.

However, this development is a "short-term reprieve that avoids holiday disruptions," analysts at Singapore-based trading desk QCP Capital wrote in a Wednesday note. They described it as a "textbook case of 'kick-the-can' policymaking that removes immediate tail risks but doesn't resolve the structural issue."

The recovery remains fragile amid ongoing concerns, including the government shutdown, U.S.-China tariff tensions, and credit market volatility.

"Bitcoin's dip on Tuesday to $103,000 stems from broader risk-off sentiment, including cooling in the AI trade and profit-taking after recent highs," Ryan Lee, chief analyst at Bitget, told Decrypt.

Though official data releases remain paused due to the shutdown, private data has maintained the Federal Reserve's "data-driven policy-making" narrative, QCP analysts highlighted. Thursday's inflation data is particularly critical for setting market tone through year-end.

"Expect higher intraday volatility," Rachel Lin, CEO and Co-Founder of SynFutures, told Decrypt. "Price will be driven by a tug-of-war between continued OTC/institutional accumulation and headline-driven liquidity shocks."

Despite near-term uncertainty, "potential Fed cuts and resilient corporate earnings should support risk sentiment and Bitcoin into year-end," QCP analysts noted.

On Myriad, users place a 28% chance on there being two Fed rate cut changes in 2025.