Stock Market Outlook: Wall Street can’t stop selling leverage

And now the products are reaching private companies.

On Tuesday, 21shares listed CLAU in Vienna, billed as Europe’s first ETP offering exposure to Anthropic’s implied pre-IPO valuation.

Importantly, it doesn’t actually own a single Anthropic share.

It gets there through notes and swaps tied to Binance perpetual futures, which to me comes across as a bit too clever.

To be sure, a launch count measures issuer marketing, not necessarily investor money.

Morningstar data show leveraged and inverse ETFs are also closing at a record pace.

Issuers throw products at whatever is hot and scrap the ones that miss. It’s largely about shots on goal.

Sohn wrote that a decent chunk of single-theme ETFs are about 20% off their recent highs, while cyclical-versus-defensive sector flows sit in their bottom decile over the trailing year.

Now, none of this is necessarily a top signal.

Leveraged ETFs debuted in 2006, more than a year before the 2007 peak, and a record wave of launches in 2025 was followed by more gains.

Product booms are a symptom of risk appetite, not a sell signal.

What matters now is how these products behave when jitters flood the market.

Most leveraged funds reset daily, so a sharp move followed by a reversal can leave holders worse off than the performance of an underlying asset. This phenomenon is called volatility drag, and volatility will drag investors hardest in choppy sessions.

Wall Street is doing what Wall Street has always done.

It’s selling a risky product because investors keep buying it.

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📊 September CPI is expected to show inflation reaccelerating. Economists look for a 0.6% monthly rise and 3.6% year over year with core up 0.2% and 2.5% annually ahead of Wednesday’s 8:30am ET print. (CNBC)

📈 Big-bank results showed consumers still spending through higher rates. JPMorgan card loans rose 7% and Citi US card spending climbed 11% from a year earlier while charge-off rates improved. (Yahoo Finance)

🤖 Memory chip stocks extended their sell-off on China competition fears. Micron fell 3.6% and SK Hynix tumbled 10% in Seoul after CXMT outlined progress on a denser memory design. (Yahoo Finance)

Tatiana Darie is a macro strategist at Bloomberg. We sat down to discuss why stocks keep hitting records with yields above 5%, why she thinks the AI cycle is in a mature stage, the junk credit risk investors should pay attention to, and her favorite sectors heading into 2027.

🗓 October 14, 1996: The Dow Jones Industrial Average closed above 6,000 for the first time, finishing at 6,010.00 after a 40.62-point gain.

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