Bitunix Analyst: Nonfarm Payrolls in Focus, but AI Valuation and Liquidity Imbalance Pose Real Risks

Huo Xing Finance reports: On June 5, although the Middle East situation has entered the final stage of U.S.-Iran negotiations, there remains considerable distance before genuine risk mitigation is achieved. Whether it’s the negotiations over the release of Iranian funds, ceasefire conditions in Lebanon, or the ongoing tensions between Israel and Hezbollah, all remain in the negotiation phase rather than showing significant de-escalation. Thus, geopolitical risks have not disappeared; they have merely been temporarily overshadowed by market focus on tonight’s upcoming U.S. non-farm payroll and unemployment rate data. The U.S. economy is currently sending conflicting signals. On one hand, total layoffs by U.S. companies in May reached the highest level for the same period since 2020, and initial jobless claims rose to their highest level since February, indicating that some firms are becoming more conservative about future demand. On the other hand, market expectations still anticipate positive non-farm payroll growth for May, with the unemployment rate likely holding steady at 4.3%. This state—where the labor market is cooling but has not yet deteriorated significantly—explains why San Francisco Fed President Daly emphasized that the Fed currently cannot commit to rate cuts nor rule out further policy tightening. However, if we broaden our perspective to the overall asset market, the real issue of concern is not interest rates, but the extreme concentration of global capital around the AI growth narrative. From SpaceX launching its IPO roadshow, to Anthropic publicly calling for a pause in frontier AI research, to continued inflows into global tech ETFs, all indicate that market expectations for AI’s future productivity revolution remain intensifying. Yet, a concerning trend is emerging. Current data shows that the total market capitalization of U.S. stocks stands at approximately $75–76 trillion, while U.S. M2 money supply is around $22.8 trillion, resulting in a ratio of 316%. This far exceeds the roughly 150% ratio before the 2008 financial crisis and even surpasses the peak of around 300% during the 2000 dot-com bubble. This means that the expansion of stock market valuations has far outpaced the growth of actual monetary supply. More importantly, this valuation expansion is heavily concentrated among a few large technology firms. Companies such as NVIDIA, Microsoft, Apple, Alphabet, and Amazon—beneficiaries of AI—are continuously driving index performance, creating a classic capital concentration effect. Since increases in market capitalization do not require equivalent cash inflows, the pace of paper wealth growth vastly exceeds the expansion of actual liquidity. Should large institutional investors begin to realize profits, price volatility under today’s high-valuation environment could be significantly amplified. Globally, the U.S. ratio of market cap to money supply is at an extreme level. Japan stands at approximately 102%, while major European markets range between 50% and 90%. The U.S., however, exceeds 300%. This reflects unprecedented global capital inflows into U.S. technology and AI industries, pushing market expectations for future growth to historic highs. Therefore, tonight’s non-farm data is not only critical for determining the Fed’s next policy direction but also for testing whether the fundamental premise supporting today’s high valuations still holds. If employment remains resilient, markets may continue to accept coexisting high valuations and high interest rates. But if economic data begins to weaken while corporate earnings fail to keep pace with the AI investment narrative, the risk facing markets will no longer be lack of liquidity—but rather excessive valuation pressure built upon overreliance on a narrow set of growth stories. For the crypto market, this is likewise a significant signal. As global capital continues concentrating in AI and large-cap tech stocks, crypto assets will continue to compete for funding allocation in the short term. However, should markets begin questioning the合理性 of U.S. equity valuations, the speed of capital rotation and risk repricing could far exceed current market expectations.