“with the pullback in energy prices, the breakdown in crude and the seemingly near resolution in the Middle East…”
Energy pullback and Middle East de-escalation broaden the rally beyond mega-cap tech, lifting equal-weight RSP.
“if crude starts to really go down very sharply on that, and most of my cycles say it's going to continue to drop.”
Crude rolling over sharply on Iran peace deal; cycles say it keeps dropping
“biotech, as of today, we see XBI breaking out to the highest level in about 5 years. Healthcare clearly in a very seasonally bullish time.”
Biotech breaking out to 5-year highs into a seasonally bullish healthcare window
“30-year yields, both real and nominal yields kind of pushing near 3 or 4-year highs … the test would be a higher move in the long end”
Long-end yields push to multi-year highs as market tests Warsh on whether he can cut
“we're on pace to do 2x what the biggest up year for semis was ever … the ratio of semis to NASDAQ…”
Semis are 2x the biggest up year ever and most stretched vs NASDAQ in history, set to unwind
“even the REITs, the real estate investment trusts, if you think about over the last 5 years, they're the only S&P 500 sector that's red over that timeframe.”
REITs breaking out of a multi-year base, the only red S&P sector, finding a floor
“banks are breaking out … most European and also US commercial banks have been showing very good strength”
Banks breaking out at highs lead the rotation as breadth broadens
“Consumer discretionary … has gotten beaten up very badly in the last year. And I sense that we're having a snapback rally”
Consumer discretionary snaps back on ceasefire and falling gas as beaten-up names bounce
“I would look at sort of another ceasefire trade possibility of just consumers snapping back also over the next couple months. … I would look at the hotels.”
Marriott a hotel pick on consumer snapback into late summer
“I would look at sort of another ceasefire trade possibility of just consumers snapping back also over the next couple months. … that means airlines do well.”
Delta a top airline pick on the consumer ceasefire snapback
“consumer discretionary … has gotten beaten up very badly in the last year. And I sense that we're having a snapback rally.”
Ralph Lauren leads beaten-up apparel snapback within consumer
“if you're open to a 2-year trade, then I think software makes a lot of sense and picking the leaders within software.”
Software the way to own tech as a 2-year trade, picking the leaders
“I sense that the AI trade is going to be continuing probably into 2028 … earnings estimates are being ratcheted up.”
AI CapEx trade continues through 2028 as earnings estimates ratchet up, tech stays a buy on dips
“if you were to overlay, you know, the start of the tech bubble at December of '94 when Netscape launched…”
Tech faces a 20-25% correction this cycle, mirroring summer 1998, base case for the AI bull
“I think if in the near term, if we get a correction in tech like I'm expecting, then outside of the US will outperform.”
Outside-US markets outperform near-term if tech corrects, rotation favors international
“We saw long-term breakouts in things like ILF, the Latin American 40 … As the dollar starts to pull back, I believe, over the next few months…”
ILF Latin America broke out long-term, aided by a dollar pullback over coming months
“I generally think the US will start to rebound certainly by the fourth quarter and start to … strengthen versus the rest of the world.”
US stocks rebound and strengthen versus rest of world by Q4 as AI and energy lead
“As the dollar starts to pull back, I believe, over the next few months, and that can aid that area further.”
US dollar pulls back over the next few months before snapping back, a temporary decline