Bitunix Analyst: The market focus is on non-farm payroll verification, but the real risk comes from the imbalance between AI valuation and liquidity

Mars Finance News: On June 5, although the Middle East situation has entered the final stage of the US-Iran negotiations, there is still a considerable distance before the real risks are truly lifted. Whether it is the Iran funds thaw negotiation, the ceasefire conditions in Lebanon, or the contest between Israel and Hezbollah, all of it is still in the negotiation stage rather than a full-scale de-escalation. Therefore, geopolitical risks have not disappeared—only the market’s short-term attention has temporarily shifted to tonight’s upcoming US non-farm payroll report and unemployment rate data.

At present, the US economy is showing quite contradictory signals. On the one hand, the total number of layoffs in May hit the highest level for the same period since 2020, and the number of initial jobless claims also rose to a new high since February, indicating that some companies are starting to become more conservative about future demand; on the other hand, market expectations are that May’s non-farm payrolls will still maintain positive growth, and the unemployment rate may remain steady at 4.3%. This state of labor-market cooling but not yet showing a clear deterioration also explains why San Francisco Fed Chair Daly emphasized that the Federal Reserve can neither commit to rate cuts nor rule out the possibility of further tightening.

However, if we zoom out to the overall asset market, the real issue worth paying attention to is not interest rates, but the high concentration of global funds in the AI growth narrative. From SpaceX launching an IPO roadshow to Anthropic publicly calling for a pause in cutting-edge AI R&D, and to ongoing inflows into global technology ETFs, all show that market expectations for AI’s future productivity revolution continue to heat up.

At the same time, a warning-worthy phenomenon is beginning to appear. Based on current data, the total market capitalization of US stocks is approximately $75 to $76 trillion, while the US M2 money supply is about $22.8 trillion—bringing their ratio to 316%. This is not only far higher than the roughly 150% level before the 2008 financial crisis, but even exceeds the peak of about 300% during the 2000 dot-com bubble. This means that the rate at which stock market capitalization is expanding has already far outpaced the growth rate of real money supply.

More importantly, this round of market-capitalization expansion is highly concentrated in only a handful of large technology companies. AI beneficiaries such as NVIDIA, Microsoft, Apple, Alphabet, and Amazon continue to drive index performance, forming a typical capital concentration effect. Because increases in stock market capitalization do not require an equivalent inflow of cash, the growth rate of paper wealth in the market far exceeds the pace at which actual liquidity expands. Once the market starts to see large institutional profit-taking, price volatility in a high-valuation environment could be further amplified.

From a global perspective, the ratio of market capitalization to money supply in the United States is also at an extreme level. Japan is at about 102%, while most major European markets are mostly between 50% and 90%, whereas the United States is above 300%. This reflects that global capital is concentrating into the US technology and AI industries at an unprecedented speed, pushing market expectations for future growth to historical highs.

Therefore, tonight’s non-farm payroll data matters not only in determining the Fed’s next policy direction, but also in validating whether the core premise under which the market is willing to assign high valuations still holds. If employment remains resilient, the market may continue to accept an environment in which high valuations and high interest rates coexist. But if economic data begins to weaken and corporate profit growth cannot keep pace with the vision outlined by AI investment, the risks the market faces in the future will no longer be a lack of liquidity, but rather valuation pressures accumulated from over-reliance on a small number of growth narratives.

For the crypto market, this is also a signal worth paying attention to. When global funds keep concentrating on AI and large-cap tech stocks, crypto assets in the short term still need to compete with these high-growth assets for capital allocation. But if, in the future, the market begins to question the reasonableness of US stock valuations, the speed of capital rotation and risk repricing could be much faster than what the market currently expects.