Nov 9, 2026 · 15 min
Technical selling deepens AI market rout as election reshapes policy outlook
Top of the Morning: CIO Strategy Snapshot - Weeks when decades happen
The episode separates market mechanics from economic fundamentals while examining how election results could influence fiscal policy, regulation, trade, and AI infrastructure.
- 1Positioning, systematic selling, and deleveraging amplified the AI-related sell-off more than weakening economic or corporate fundamentals.
- 2Election results could reduce fiscal contraction while increasing uncertainty around trade, regulation, and state-level data-center policy.
- 3Draho remains constructive medium term but favors diversified exposure as near-term volatility and AI-investment uncertainty persist.
Don't miss
Jason Draho’s distinction between regulating data-center development and stopping it entirely reframes the likely effect of state-level politics on AI investment.
The brief
Jason Draho of UBS’s Chief Investment Office argues that the sharp AI-related decline reflected positioning, systematic selling, and deleveraging—not a major deterioration in economic or corporate fundamentals.
Retail selling, leveraged ETFs, credit spreads, and volatility markets helped amplify the move, while unusual forced selling suggests much of the capitulation may already be complete.
The midterm results could mean less fiscal contraction but more uncertainty around trade and regulation; state politics may matter especially for planned data-center capacity.
Draho expects data-center restrictions to focus on electricity, grids, water, and community benefits, slowing investment only marginally in the near term.
With labor markets and consumers resilient, Draho sees growth near trend and a constructive medium-term outlook, but recommends diversified exposure beyond AI-dependent sectors.
What was said on this episode
12 statements · 5 positive · 4 negative · 3 neutral
Thursday’s sell-off was driven mainly by positioning and deleveraging, not fundamentals.
“For Thursday specifically, I'd say it looks to be more of a positioning-led sell-off or deleveraging, more so than fundamentally driven.”
Listen at 1:23
Systematic-strategy selling was probably mostly complete.
“It would suggest most of that selling is probably done.”
Listen at 3:44
Restoring spending cuts could add about 20 basis points to next year’s GDP growth.
“If they're successful, it could add about 20 basis points of GDP growth next year relative to the current baseline.”
Listen at 4:52
Texas, Georgia, and Michigan represent about 45% of planned data-center capacity.
“Those three states combined represent about 45% of planned data center capacity build-out, and Texas alone is about 25%.”
Listen at 6:37
New data-center regulations may slow AI investment only marginally.
“These new regulations and restrictions may slow AI investment, but ultimately kind of perhaps only marginally.”
Listen at 8:28
The U.S. economy is fundamentally solid heading into 2027.
“the economy reigns fundamentally solid heading into 2027.”
Listen at 9:39
U.S. growth is expected to moderate to around 2% in 2027.
“Ultimately, we expect it to moderate in 2027 to still around 2%, which is kind of trend level growth or thereabouts.”
Listen at 10:39
The Fed is expected to hike once in December and once in March.
“we still stick with the Fed. Hiking rates once in December, once more, one final time in March, so three hikes in total”
Listen at 11:04
Markets are likely to remain volatile in the near term.
“the markets are likely to be volatile”
Listen at 11:55
S&P 500 earnings are expected to grow about 15% next year.
“We expect earnings growth next year to be up another 15% for the S&P 500 or thereabouts.”
Listen at 12:41
Investors should use volatility to add diversified exposure to quality, less AI-dependent areas.
“we recommend that investors use this market volatility to increase diversified exposures into higher quality companies and areas of the market that are less tied to the EI trade”
Listen at 13:02
Financial stocks should remain relatively resilient if macroeconomic conditions stay favorable.
“If the macro is good, financials should be relatively resilient overall.”
Listen at 13:36
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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