If you had to pick just one word to describe the US equity market in 2024, what would it be?

Wait. Don’t answer that yet. Let me issue an addendum: If you had to pick just one word to describe the equity market in 2024 other than “bubble,” what would it be?

“Concentrated” is a good candidate. Of course, most bubble narratives revolve around extreme market concentration, so maybe “bubble” versus “concentrated” is a distinction without a difference.

Anyway, much (too much, arguably) has been made of the extent to which cap-weighted equity indexes are now beholden to a small handful of names. So-called “concentration risk” is, on some common measures, as high as it’s been since the dot-com bubble.

If you like those sorts of statistics (and the charts people make from them), you’ll love this stat, from SocGen: “Tech+” sectors (which the bank defines as Tech and Comms Services) are now contributing 70% of overall index monthly volatility.

As the chart above shows, that’s on par with dot-com levels.

Part of that’s the long duration dynamic — long-duration equities are more sensitive to bond vol, and while the MOVE’s receded of late, rates vol was obviously quite elevated at times over the course of the last two years.

And yet, as SocGen’s Vincent Cassot and Jitesh Kumar pointed out, the idiosyncratic nature of the AI narrative has driven the tech+ sector’s correlation with traditional bond proxies to very low levels. “This is arguably because tech+ sector prices are being driven more by high earnings expectations than bond market movements,” they wrote.

In the full note, Cassot and Kumar go into considerable detail around the implications for correlation, dispersion and vol, but for our purposes here, the quick takeaway is that there’s “an extraordinary amount of risk contribution” emanating from the so-called “tech+” complex.