All I Want for Christmas Is AI

It was the week before St Nicholas when all through the house not a creature was stirring, not even a mouse, and the S&P 500 was within a whisker of its all-time high. Treasury markets are now pricing in a 90% chance of a Fed rate cut this month, and if Powell doesn’t trip over his own press conference, we may yet unwrap a tidy little year-end rally.

Meantime, the S&P 500 equal-weight index is lagging its heavily concentrated, prettier cousin by almost 9% this year. Semiconductors and AI-linked names have been doing all the heavy lifting, while banks wobbled, small caps rolled over, cyclicals stalled, and even defensives caught a bid for all the wrong reasons. Markets aren’t broadening; they’re narrowing. Again.

Is this sustainable? If you had bought Amazon at the top of the dot-com frenzy in 2000, you would have endured a 90% drawdown but still be sitting on gains north of 3,000% twenty years later. So, ask yourself this: for the next two decades, would you rather own the company with $691.3 billion in revenues, or the one selling trainers in a mall?

We used to worry that tech firms were merely collecting our data. Today we are willingly teaching their models how we think, what we fear, and how we decide. That isn’t just a business edge, it’s a monopoly on human behaviour, monetised at an industrial scale. Forget internet cookies; the machines have taken the whole bakery. Merry Christmas.