Cameron Dawson on Earnings Strength, AI CapEx & Fears in "Lack of Fear Itself"

Cameron Dawson, CIO of New Edge Wealth, confirms a strong bull market driven by robust earnings growth, but warns of short-term overbought conditions, narrow breadth, and extreme risk appetite. She sees potential for digestion/summer volatility, views bonds as a hedge against weaker growth, and questions the sustainability of peak valuations on cyclical earnings.

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Cameron Dawson on Earnings Strength, AI CapEx & Fears in "Lack of Fear Itself"

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The guest confirms a bull market driven by earnings, but warns of overbought conditions, narrow breadth, and extreme positioning, suggesting potential digestion/short-term volatility. The long-term trend is up, but near-term caution is warranted.

rut

The Russell 2000 is at a record, consistent with the broad bull market. However, the guest's warnings about narrow breadth and overbought conditions apply broadly, including to small caps.

yields

We saw an opportunity to add a little bit to duration last week... if we have a weaker summer period of growth, that could be a reason that we could see bonds rally.

Diane King Hall

The S&P 500, Nasdaq, Russell 2000, and equal-weight S&P 500 are all at records. Why is the trend up?
Cameron Dawson

It is a bull market driven by earnings. 2026-2027 earnings estimates are up ~11%, matching the S&P 500's YTD gain. Multiple contraction has occurred because earnings are so strong.
Cameron Dawson

Markets are slightly overbought in the short run, breadth is narrow, and positioning has swung from very underweight to very overweight stocks, suggesting potential digestion through the summer.
Diane King Hall

Micron had a huge move after a UBS price target of $1625. What do you make of that?
Cameron Dawson

Micron is being re-rated from a cyclical to a secular growth story due to AI demand. The stock traded at 32x earnings in 2025, now at 26x, so further multiple expansion is possible.
Diane King Hall

You talked about animal spirits returning. What's your worry?
Cameron Dawson

The only thing to fear is the lack of fear itself. Put/call ratios, leveraged ETF flows, and FINRA margin debt all show an insatiable appetite for risk.
Diane King Hall

Semiconductors make up 16-18% of the S&P 500 vs 2% a decade ago. Does that concentration make the market more vulnerable?
Cameron Dawson

Yes, it makes the market more volatile and cyclical. When the AI capex boom ends, it could add earnings volatility.
Diane King Hall

What's your view on bonds? The 10-year is at 4.46%.
Cameron Dawson

We saw an opportunity to add duration last week when bonds were oversold. The 10-year is correlated to economic surprises; if growth softens over the summer, bonds could rally.
Diane King Hall

Goldman Sachs set a new S&P 500 year-end target of 8000. Does that make sense?
Cameron Dawson

You can make the math work with forward earnings and a peak valuation multiple, but the key question is whether the market will apply peak valuations to cyclical earnings. Analysts chasing estimates higher and extreme positioning (Deutsche Bank shows 93rd percentile weight in large-cap tech) suggest complacency.

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