Market drawdown vs. downturn: Watch the fundamentals

Markets have seen drawdowns driven by policy uncertainty, not fundamental deterioration. This means the current bull market likely remains intact, despite rate hike speculation.

Tight credit spreads and strength in small-cap and equal-weight indexes support this view. The real risk to the bull market is an AI investment cycle breakdown, not Fed tightening. Watch for earnings disappointments or a pullback in AI spending for signs of trouble.