We're seeing a trickle-down effect from the AI trade since 2023. The unique aspect is concentration - there are only three key chip makers with Micron being key. Earnings will be really important. Micron is priced for perfection. Options markets imply wild swings to the up or down. But Nvidia has continued to beat on the upside, so that's what we'll look for with Micron.

There's room for upside from a valuation perspective. Looking at broader technology breadth - year-to-date, market-cap tech and equal-weight tech have performed in line because some Mag 7 names have been weighing down the index. There's opportunity underneath the surface. But guidance later this afternoon could stoke a lot of volatility.

We bid up these companies aggressively. Now investors are being more discerning. If you're just grabbing market-cap weighted indices, you get underperformers. I'm seeing optimism in breadth with some sectors - there are green shoots that would ensure more strength across the market.

Before the Strait of Hormuz closure, there were uplifting signs in value stocks, cyclical stocks, and small caps. With the ceasefire, markets are focused on the direction of interest rates and the Fed. If we're looking at higher for longer and potential rate hikes, we'll continue to see pressure on small caps and cyclical parts of the market.

We're on a precipice of higher rates trickling down into growth stocks. If PCE comes in higher than expected tomorrow and markets price in two hikes this year, that will put pressure on growth stocks and AI stocks specifically. A lot of this is driven by technicals and flows rather than fundamentals, which is a concern for asset allocation.

10 years ago, active management was considered concentrated and passive indices were the safer, diversified play. Investors haven't pulled back the layers of what they own. The concentration in passive strategies, especially US large-cap equities, means a couple names drive most of the return. False diversification means diversified on the surface but not actually diversified. We need to introduce real sources of lowly correlated diversification.

Gold was hit by flight-to-safety trade during March tensions - investors had to sell gold positions that had rallied. Recent pressure is from expectation of rates higher for longer, which pressures gold as a non-yielding asset. There are headwinds in the near term but significant central bank and foreign bank buying will support it longer term.