Defensive Sectors Exhausted, Market Poised for Broad Correction
While sectors like staples (XLP), energy (XLE), materials (XLB) and industrials (XLI) have all provided a safe haven in recent weeks as large cap tech has sucked wind, most of these are all now reaching exhaustion. This means that from here, the indices can continue to be bolstered by the baton getting handed back to the big tech laggards to lead again, or it all corrects. The next move is the latter - correlations rising as everything moves down together.
AI Spending Lifts some Assets, Hurts Major Stock Valuations
The AI capex boom is absolutely stimulative to *certain* assets in the ecosystem and supply chain, but that won't be Mag7 stock prices from here. Revenue growth is slowing, input prices rising and you can connect the dots on what...
US Backs Coal Revival as Indonesia Slashes Output
Two major coal developments in the last 24 hours. 1. White House announcing purchases and support to revive the industry 2. Indonesia just ordered the world's largest nickel mine to sharply cut output. They are also looking to cut coal production by...
Dollar Weakening as Diverging Policies Boost Global Assets
I keep playing through the potential outcomes over the coming months and I have a very difficult time painting a bull case for the dollar. I expect: 1. Monetary policy divergence widens (more dovish US vs RoW/Japan) 2. Capital flight risk as...
Weak Retail, Slowing Wages Hint at Poor NFP
Bad retail sales, falling wage growth and now Hassett and Navarro comments implying bad NFP tomorrow...