Warsh’s first FOMC meeting marked the Nasdaq top.

Real rates have risen by roughly 50bps as Treasury yields climbed while long-term inflation expectations barely moved.

That tightens financial conditions. It also matters when the hyperscalers are issuing more debt to fund an AI capex buildout that has become increasingly expensive.

Fair enough. Higher real rates do put pressure on long-duration assets, and the AI complex is exactly that.

But I still prefer the simpler explanation.

The AI trade had a huge run in H1. It became crowded, extended, and very obviously loved by the market.

At some point, even great trends need to cool off. That's what's happening.

AMZN and GOOG are flat on the year. META is down around 10%. MSFT is down closer to 20%, while the Nasdaq is still up roughly 10%.

That does not automatically mean the AI buildout has broken.

It may mean investors are finally asking whether every extra dollar of capex will produce an immediate return. Of course they are. When the bill gets bigger, the market starts checking the receipt.

Treating every drawdown as proof that a theme has died is the mistake.

Sometimes it has. Other times, price is simply digesting a move that got too far ahead of itself.

Those are very different situations. Confusing them is how you sell a leader into weakness, then watch it resume without you.

We’ve introduced a co-momentum indicator into the Academy to track exactly this: when a trade is becoming overcrowded.

If you look at the bottom pane, this is showing the level of crowding in the market…

It’s still elevated (doesn’t mean the market will fall further and is used as a risk management tool, more explained in the Academy videos).

That matters far more than pretending every red week needs a new macro villain.

The overriding point here is simple...

Crowding does not invalidate a trend.

It tells you to respect the risk, understand the positioning, and stop confusing a cooling off period with the end of the world.

David Belle