Fear Was Already Entrenched Before the Ballot Verdict

The sentiment figures tell a subtler story than the dominant narrative. The CNN Fear & Greed Index stood at 32.34 on November 2. It fell to 20.05 on November 3, a drop of 12.29 points in a single session. By the index's convention, that zone corresponds to extreme fear.

The sequence of events matters. This reading precedes the announcement of the Democrats' victory in Congress, which came in the night of November 3 to 4. The election therefore does not explain this plunge. It grafted itself onto an already nervous market, which changes how the November 4 moves should be interpreted.

What the Vote Triggered

Once the result was known, the reaction was swift. Asian technology stocks retreated and the dollar weakened, while Treasuries drew safe-haven demand. Investors began reassessing positions built on Donald Trump's agenda, oriented toward deregulation and accelerated construction of AI infrastructure.

The stakes are not so much the Democrats' legislative capacity, which the presidential veto limits. They lie rather in the oversight, investigations and spending control that an opposition majority implies. For a sector whose growth rests on massive investment, uncertainty over the political framework weighs directly on valuations.

AI, an Asset Now Financed on Credit

What makes this fragility structural is the financing method. Meta raised $15 billion on the US bond market on November 3, then launched its first euro-denominated issue in quick succession. Together with Microsoft, Oracle and Alphabet, the four groups have issued nearly $57 billion of debt since the end of the previous week. It is one of the heaviest sequences ever observed for Big Tech debt.

The mechanism is clear. When infrastructure spending runs into the trillions of dollars, self-financing no longer suffices and balance sheets lean on credit markets. The sector then becomes sensitive to two parameters: the cost of borrowing and the perception of political risk. The AAA euro-area sovereign rate benchmark, at 3.326519% on 10 years as of November 2, gives an order of magnitude for the cost floor facing issuers turning to the European market. Its level component (Beta0), at 1.661363, however gives no trend signal without a comparison series.

A Supply Constraint That Complicates the Equation

Political risk is not only domestic. Chinese groups such as Alibaba, Tencent and ByteDance ordered roughly 6 million Nvidia RTX Pro 5500 chips. They expect to receive only a few tens of thousands, about 1%, in the next four months. For its part, Oracle cancelled a $7 billion chip-leasing agreement with Tencent, after concerns raised by US officials.

These two facts show that geopolitics and production capacity already frame AI's trajectory. Adding a more critical Congress completes a landscape in which demand exceeds supply and regulation remains unpredictable.

What the Market Sets Against This Reading

The bearish reading is far from consensus. Dip buyers appeared in tech as early as November 4, on the grounds that the election removes an uncertainty and brings attention back to fundamentals. According to Barclays' head of European and Asia-Pacific equity strategy, Emmanuel Cau, fears of national data-centre bans are barely credible, given the president's support for AI.

Above all, the bond market's openness is a strong signal. If investors feared a financing blockage, Meta's issues and those of its peers would meet resistance. That is not what volumes describe. Debt markets therefore distinguish, for now, valuation risk from refinancing risk.

A fundamental counterpoint nonetheless remains in credit. Tony Yoseloff, chief investment officer of Davidson Kempner Capital Management, believes private credit faces greater difficulties than the public market, owing to higher rates, slowing corporate growth and a debt wall maturing in 2027 and 2028. That diagnosis does not directly target AI financing, but it is a reminder that access to credit is not guaranteed over time.

The Limits of What the Data Can Establish

Precision is required on what the file demonstrates. We have two data points for the Fear & Greed Index, a single observation for the 10-year AAA euro-area rate and its level factor, and no comparable prior value. Extraction of detailed macro-indicator and OECD data failed, which rules out measuring a trend or testing the sentiment indicator against other series.

The link between extreme fear and political risk therefore remains a working hypothesis, not a demonstration. Index values may reflect other factors that the file does not document.

A Repricing Phase, Not a Confirmed Reversal

What can reasonably be concluded comes down to three points. Sentiment was already in extreme fear before the election. The political result adds regulatory uncertainty to a sector that increasingly depends on debt to finance its growth. Finally, bond markets remain open, which for now limits the risk of a financing shock.

What follows will depend on the new majority's ability to turn its oversight powers into real constraints, and on the path of rates. As long as these two variables remain stable, the current repricing looks more like a risk-premium adjustment than a regime change.

This article was written with the assistance of artificial intelligence and verified by our editorial team.