The left side of the screen contrasts growth assets such as AI, semiconductors, automobiles, and industrial equipment, while the right side displays defensive assets like the Federal Reserve, banks, and cash equivalents. This symbolizes the "simultaneous accumulation of offense and defense," where investment funds move into tech stocks while still holding bonds and cash. [Photo: Hanmi Ilbo Graphics]

Money Did Not Abandon Risk... It Bought Risk by Separating It

Last week, Money Insight questioned whether the rebound after the sharp decline should be viewed as a simple bargain hunt or a confirmation that the AI investment cycle is alive.

The criteria for judgment were whether money would return to tech stocks after the SpaceX listing supply and demand concluded, and whether the US 10-year Treasury yield would once again derail the stock price rebound.

This week, the market opted for a bull market. However, it did not buy stocks by ignoring all risks.

This week’s Money Insight title is "Simultaneous Accumulation of Offense and Defense."

This week, Money Insight asks one question.

"If money flowed into both stocks and safe-haven assets simultaneously, is the market optimistic or anxious?"

Global equity funds saw an inflow of $55.2 billion over the week, the largest in 19 months. US equity funds received $38.4 billion, and tech funds saw a record $21.5 billion inflow.

The market accepted the US-Iran peace MOU and the sharp drop in oil prices as reasons to buy risk assets again.

However, during the same period, global bond funds received $17.2 billion, and money market funds saw an inflow of $40 billion. The money flowing into stocks did not mean money was being withdrawn from cash and bonds.

This indicates that while new liquidity is entering the market, investors are not betting all their funds on a single direction.

Offensive funds headed towards AI and semiconductors. Defensive funds remained in short-term bonds and cash equivalents.

Investors bought into the peace and falling oil prices but did not ignore the possibility of interest rate hikes presented by the FOMC.

In this structure, even if stock prices rise, the gap between individual stocks widens.

While high prices are paid for semiconductors with clear growth potential and confirmed earnings, funds do not linger in thematic stocks that lack the cash flow to withstand rising interest rates.

Rather than buying the entire stock market, investors are selecting only certain companies deemed capable of outperforming interest rates.

As the bull market progresses into its later stages, market money becomes concentrated in narrower areas.

This week, semiconductors, particularly memory and AI infrastructure, are playing that role. As long as this concentration is maintained, the index can rise, but if the earnings or interest rate assumptions of the leading stocks falter, the exit also narrows.

Next week, both of these preconditions must be confirmed simultaneously.

Micron's earnings will show whether AI and memory investments are translating into actual profits. PCE inflation will indicate whether inflation is high enough for the Fed to raise interest rates.

If Micron performs well and PCE is low, the bull market will extend. If Micron falls short of expectations and PCE is also high, the current concentrated funds could quickly flow back into cash.

The one-sentence conclusion is as follows:

"Money has not left risk assets; instead, it is buying risk by differentiating between risks that can beat interest rates and those that cannot."

Next Week's Checkpoints Are Threefold

First, Micron's earnings on the 24th. This is the first test to see if the AI investment race can continue to support high profit margins for semiconductor companies.

Second, US PCE inflation, final Q1 GDP, and May durable goods orders on the 25th. If inflation is high and the economy is strong, the possibility of interest rate hikes increases. If both inflation and the economy are slowing, the market may once again reflect expectations of easing.

Third, the direction of funds in equity funds and money market funds. If inflows into stocks and cash continue simultaneously, "prepared risk appetite" is maintained. If funds begin to pour solely into money markets, it signals a shift from market optimism to defense.

The formula that will divide the market next week is simple:

"Can semiconductor earnings beat interest rates?"

※ This article is an informational content analyzing publicly available market data and does not constitute an offer to invest in any specific financial product.