I liken this to the beginning of the year when accumulated worries around software and debt emerged. We saw the most hedged position in 30 years at the lows in March. The skepticism is there, but we are transitioning the wall of worry from high oil to concerns around supply and less transparent monetary policy.

The market isn't hedged to that degree now, but skepticism remains. Earnings are supporting the debt pile.

Mathematically you can't. Chip names have done the heavy lifting. You will need a refreshed attitude toward the Mag 7. Over this bull market, earnings and price have caught up to each other in certain periods, and we think this is one of those periods. Price will start to advance once more.

It will take more churn, volatility, negativity, and then earnings—the proof of the pudding that caused the rally in April and May.

This is where we figure out how supply and demand interact. The message is 'you IPOed, maybe you should have waited until you got included in the NASDAQ 100 before marketing debt.' The market action is a more significant volatile churn. The stock is still comfortably above the IPO price.

Stocks don't go to the moon and Mars indefinitely.

Small caps have been the default short for active managers during this bull market. That faded as the year started due to concern around technology and agitation about the short end of the interest rate curve. But the long end is incredibly well anchored around 4.50%, the labor market is adjusting, and oil prices are positive for small caps. This tends to be around the Russell rebalance time for maximum small cap outperformance. We wouldn't be surprised by a little bit of reversion as Q3 starts.

The concept of picking stocks and getting national champions has been seen with old-line US technology names. Anointing winners and losers has its own issues at the government level, but the fact that the government is forcefully behind the AI revolution is a positive for investors broadly.

The bigger picture of making sure the US is on the front foot versus global competitors in technology is a positive. There is a rolling ball of money racing to the next big thing in tech. Volatility works both ways. We don't think we're in a bubble because for the last 6 weeks clients have been asking how to hedge AI. There is a larger universe of stocks moving inversely to the S&P—negative beta names—that act as portfolio diversifiers.

People are looking for reasons to hedge yet stay invested.

In an environment where we're concerned about higher inflation on a sustained basis, history tells you stocks are the best hedge. These stocks are across industries: energy, consumer names, utilities, and select financials.

Energy has been moving inversely to the S&P 500 this year. Financials traded very well yesterday in a negative tech tape.