Barclays tactical strategist Alexander Altmann works on a four-to-eight-week horizon, far shorter than traditional research's six-to-twelve-month outlook.
Altmann says the BETTY timing indicator has signalled risk-off since May, and he is tactically bearish but not bearish on the year.
Altmann argues AI companies would need about a trillion dollars of annual revenue by 2028 to justify current capital spending, and CoreWeave is the main example of financing strain.
A Barclays strategist turns tactically bearish on a well-bid market
Alexander Altmann's Barclays timing model has flashed risk-off since May, but his bearishness covers weeks, not the year. Retail savers and corporate buybacks keep a steady structural bid under stocks. The near-term danger sits in AI financing, where capital commitments far outrun revenue and stressed borrowers like CoreWeave are testing credit markets.
Takeaways
BETTY flags risk-off, but only tactically. Barclays' equity timing indicator has signalled risk-off since the end of May. Altmann works a four-to-eight-week horizon and is not bearish on the year. He sees a pullback to 17 to 17.5 times forward earnings as the reset.
Retail investors sold in 2022 but never left. Zero-commission trading arrived in October 2019 as Schwab and Fidelity matched Robinhood, and COVID stimulus added roughly 40m brokerage accounts. Retail sold during the Fed's 2022 tightening yet stayed invested. Facing fewer forced sales, retail would have outperformed institutions.
Retirement money and buybacks create a relentless bid. Altmann estimates 401(k) contributions at $800 to $900bn a year. Buybacks add about $750bn, though executions run 60 to 70% of authorizations. Brown notes two thirds of American homes own stocks, holding 35% of household net worth in equities.
AI spending far outruns AI revenue. Altmann says AI companies need about $1tn of annual revenue by the end of 2028 to pay for their capital spending, far above today's run rate. He expects net equity issuance to swing from negative to positive by more than $100bn.
CoreWeave is where financing strain shows. Spreads on data-centre debt are rising. CoreWeave, worth only $33bn, is the main stress case, and Altmann says Jensen Huang has expressed no interest in helping it. The B to CCC credit spread is near 8%, seen four other times since 1996.
Multi-manager crowding makes single-stock moves violent. Multi-manager hedge fund assets grew from about $300bn before COVID to about $1tn. Crowding drives sharp factor and stock swings like ServiceNow's 27% earnings drop. Batnick notes 40% of S&P 500 pairs are negatively correlated.
Investors remain broadly unworried about AI. In a 200-investor survey, only 60% saw a financing problem despite a recent financing wave, and feedback was overwhelmingly not bearish on AI. Altmann's bull case holds that peak AI is unimagined, as early iPhone novelty apps were not peak iPhone.
How Barclays' tactical desk reads the market
The baseline to beat is holding the S&P 500 for 42 trading days, which gives about a 73% chance of a gain and an average return near 190 basis points.
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On this episode 3
Show 1
The team tracks positioning across hedge funds, mutual funds, CTAs, volatility-control funds and retail. Backtested reports either confirm a crowded trade or point to a contrarian bet.
BETTY blends widely available data with a qualitative read from client conversations, and Altmann adds a discretionary overlay to the models. Compliance vetoed the original name, betting.
Brown argues price creates the story everyone accepts. Altmann calls most price-driven explanations noise, pointing to oil moves of a dollar or two.