It’s tempting to go ahead and call it: The second half of 2023 surely won’t be as kind to equity investors as the first half.

The Nasdaq 100 rose almost 40% in H1 after all. An encore would put this year on track to be among the best ever for big-cap US tech. That’d be some feat considering the policy backdrop.

The so-called “Magnificent 7” added one entire Germany worth of market cap during 2023’s first six months.

Another fun factoid from BofA’s Michael Hartnett: The combined market cap of Apple, Microsoft and Google now exceeds emerging markets, where more than 6.5 billion people reside.

Surely this sort of thing can’t continue, right? Well, if it’s a bubble (a real one) it could very well continue, because that’s what bubbles do — they inflate on a kind of irrational rationality that says, “I’m not buying because I believe the hype, I’m buying because I think other people are going to buy, and I’ll know when to get out, because I’m levelheaded.” We know how that usually ends.

And yet, if this is a bubble, it’s early days. Most obviously, stocks still haven’t reclaimed record highs, and multiples, while stretched, aren’t necessarily cartoonish. Further, there’s every reason to believe the A.I. narrative is just getting started and few reasons to suspect it’s “metaverse 2023,” so to speak.

Certainly, big firms are writing checks. That could, of course, be a contrarian indicator, and plenty of checks were written during the Web3 fever dream in late 2021 and early 2022. But it’s nevertheless worth noting that over the past week, Salesforce, Google, Microsoft and Nvidia invested nearly $1.5 billion in a pair of A.I. startups (Typeface and Inflection) together valued at $5 billion. As PitchBook put it recently, “It’s all indicative of a larger trend: Despite mounting pressure on venture capital in a difficult economic environment, money still pours into generative A.I. startups.”

Meanwhile, US equity ETF flows turned robust towards the end of Q2. While net flows including mutual funds are deeply negative for 2023, ETFs enjoyed a large haul over the past few weeks. The figure below gives you a sense of the breakdown.

As ever, it’s unclear if flows are following performance or driving it, but either way, cash is coming in on the ETF side.

Meanwhile, the retail crowd has room to dial up enthusiasm. After recently turning bullish, individual investors are casting a wider net, looking beyond the usual mega-cap suspects. Speculative behavior, Vanda Research said, is still short of  “euphoria levels.”

Coming quickly back to flows, note that June was the best month for US equity ETFs since October.

You could venture any number of belabored explanations for that, but you might just take an Occam’s razor view and call it indicative of buy-in for the burgeoning bull. There’s elegance in simplicity, after all.

Apropos (and this brings us full circle), the most powerful argument against the rally as H2 dawns is probably just the simplest: The first half was a tough act to follow.