Asks when the rough tech trade will stabilize and what's actually happening.
speaker1
Ed Yardeni
On Dec 7th, recommended underweighting the Magnificent Seven due to too much competition from their massive data center spending, and went overweight global instead of US. This has worked well and is healthy for the continuation of the bull market.
Questions if the rest-of-market trade is getting old, and if tech weakness combines with that, it creates a market problem.
speaker1
Ed Yardeni
The 'get out of Dodge' trade from the Magnificent Seven started in late October with Michael Barry's questions about their profitability. The global rebalancing is a fairly new development in market history.
Asks what it means when markets are quickly swayed by obscure research reports or projections.
speaker1
Ed Yardeni
Indicates the AI euphoria was unsustainable, turned to fatigue, then fear, and now almost 'AI derangement syndrome' with extreme predictions. AI is a great productivity tool net-positive, but the market is doing mental gymnastics.
Notes software has seen biggest declines since financial crisis, asks if it's overdone.
speaker1
Ed Yardeni
It is overdone to an extent. You must be a stock picker in software, not buy an ETF. Given uncertainty, go with the flow into energy, materials, consumer staples, and overseas markets which have all done well.
Counters that energy is tiny, staples may be too expensive, and these aren't areas that inspire leaning in, but the S&P could have a great year.
speaker1
Ed Yardeni
Financials have been beaten down due to AI fears, but Jamie Dimon expects JPMorgan to spend $20B on AI tech, which will be a big productivity booster. Many financials, including regionals, will benefit from AI and M&A.