Market volatility, rotation, and consumer pressure (with Dani Burger)

Ethan Devitt sees the South Korea news as a precursor to what could happen with concentrated markets. He advises staying diversified and not trying to call a bottom. The rotation out of tech is real, but flows may not leave tech unless demand fractures. Consumers are feeling the pinch, especially at the low end, and are deal-shopping. Oil and rising tech prices (like Apple) are acting as implicit rate hikes, impacting inflation and the consumer.

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Market volatility, rotation, and consumer pressure (with Dani Burger)

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Equity markets on the whole are going to be more volatile.

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Devitt advises staying diversified and not trying to call a bottom, suggesting a lack of clear directional conviction for small caps in the near term.

How are you thinking about this holiday-shortened week with jobs data and Kevin Warsh speaking?

Dani Burger
Ethan Devitt

Markets will try to work through a precursor of what we could see if AI concerns surface again. South Korea showed what happens with concentrated markets. Equity markets will be more volatile.

We can see the relief reaction today.
Is the Mag 7 sell-off a dip-buying opportunity, or should investors stay on the sidelines?

Dani Burger
Ethan Devitt

The stakes are higher due to retail participation and leverage. Trying to call a bottom or bottom-fish is dangerous. Stay diversified, stay outside the U.S., and be well-diversified across sectors.
Is the rotation out of tech and into healthcare real, or just a strange quarter?

Dani Burger
Ethan Devitt

The rotation is real, but it doesn't mean flows will leave tech. With over a trillion in money market funds, if the demand picture fractures, we will see significant rotation out of tech.
Will the narrative of cheap models, tighter budgets, and regulatory constraints continue to weigh on large AI names?

Dani Burger
Ethan Devitt

Models are coming of age with differentiation. Participants will discriminate between them. This will be a long process, not fully taking place over the summer. There will be some discerning by consumers and investors.
Does headline risk around Iran still register, given oil is around $70?

Dani Burger
Ethan Devitt

Oil has been an implicit rate hike. We haven't seen central banks need to hike because of the tightening from inflation. Now we are moving from oil to other components like technology (Apple prices). These price rises impact the consumer, especially the low-end consumer.

It comes down to kitchen table issues of affordability.

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