Bitunix Analyst: Market Focuses on Non-Farm Payrolls, But Real Risk Lies in the Imbalance Between AI Valuation and Liquidity

According to Mars Finance, on June 5th, although the Middle East situation entered the final stage of US-Iran negotiations, there is still a considerable distance to go before the real risks are resolved. Whether it's the negotiations on unfreezing Iranian funds, the ceasefire conditions in Lebanon, or the power struggle between Israel and Hezbollah, all are currently in the negotiation stage rather than a complete de-escalation. Therefore, geopolitical risks have not disappeared; the market's short-term attention has simply shifted to the US non-farm payroll report and unemployment rate data to be released tonight. Currently, the US economy is showing rather contradictory signals. On the one hand, the total number of layoffs in May reached the highest level for the same period since 2020, and initial jobless claims also rose to a new high since February, indicating that some companies are becoming more conservative about future demand. On the other hand, the market expects non-farm payrolls to remain positive in May, and the unemployment rate may remain stable at 4.3%. This state of a cooling but not yet significantly deteriorating labor market also explains why San Francisco Fed President Daly emphasized that the Fed can neither commit to interest rate cuts nor rule out the possibility of further tightening of policy. However, if we broaden our perspective to the overall asset market, the real concern isn't interest rates, but rather the high concentration of global capital in the AI growth narrative. From SpaceX launching its IPO roadshow to Anthropic publicly calling for a halt to cutting-edge AI research, and the continued inflow of funds into global technology ETFs, all indicate that market expectations for the future productivity revolution brought about by AI are still heating up. But at the same time, a worrying phenomenon is emerging. According to current data, the total market capitalization of US stocks is approximately $75 to $76 trillion, while the US M2 money supply is approximately $22.8 trillion, a ratio of 316%. This is not only far higher than the approximately 150% before the 2008 financial crisis, but also surpasses the level of approximately 300% at the peak of the dot-com bubble in 2000. This means that the rate of expansion of stock market capitalization has far exceeded the growth rate of the real money supply. More importantly, this round of market capitalization expansion is highly concentrated in a few large technology companies. AI beneficiaries such as NVIDIA, Microsoft, Apple, Alphabet, and Amazon continue to drive up index performance, creating a typical concentration of capital effect. Since an increase in stock market capitalization does not require an equivalent cash inflow, the growth rate of market book wealth far exceeds the expansion rate of actual liquidity. Once large institutions begin to take profits, price volatility in this overvalued environment could be further amplified. Globally, the ratio of US market capitalization to money supply is also at an extreme level. Japan's is approximately 102%, most major European markets are between 50% and 90%, while the US exceeds 300%. This reflects that global capital is concentrating in the US technology and AI industries at an unprecedented rate, pushing market expectations for future growth to historical highs. Therefore, the importance of tonight's non-farm payroll data lies not only in determining the Fed's next policy direction, but also in verifying whether the core premise for the current market's willingness to assign high valuations still holds true. If employment remains resilient, the market may continue to accept an environment of high valuations and high interest rates. However, if economic data begins to weaken, and corporate profit growth fails to keep pace with the vision painted by AI investments, the future risk to the market will no longer be a lack of liquidity, but rather the valuation pressure accumulated from over-reliance on a few growth narratives. This is also a signal worth noting for the crypto market. As global funds continue to concentrate on AI and large-cap tech stocks, crypto assets will still need to compete with these high-growth assets for capital allocation in the short term. However, if the market begins to question the rationality of US stock valuations in the future, the speed of fund rotation and risk repricing may be much faster than the market currently expects.