Geopolitical risk and tech resilience (with Tim Stenovek; Emily Grafeo)

David Bianco, CIO Americas at DWS, views the Middle East conflict as inflationary and expensive, but sees tech as resilient due to focus on return on capital rather than cost of capital. He is moderately overweight tech and communications, skeptical of a quick resolution in the Middle East, and cautious on bond substitutes like staples and REITs.

implicit

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RUT

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Metals

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DWS 7.8
Asset Manager $900.00B
David Bianco 9.5

Geopolitical risk and tech resilience (with Tim Stenovek; Emily Grafeo)

ndx

We're sticking with where we see unquestionable strength, which is the tech trade. We're moderately overweight tech and communications.

1 calls

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no reliable edge (random outcomes)

12/8/2025 7:06:53 PM	medium term cautious up	20 days later	-0.56%	-0.28%

wti

Bianco is skeptical of a quick resolution and notes that announcements can move oil prices $10/barrel, but actions are needed. This suggests continued volatility.

yields

Bianco notes the bond market may be losing patience and that the rest of the market (ex-tech) is vulnerable to higher yields, implying upward pressure on yields.

Tim Stenovek

Asks about the inflationary view given the Middle East conflict, linking it to inflation expectations and energy prices.
David Bianco

Conflict is expensive and inflationary, signaling a less cooperative world that weighs on productivity and growth. Actions matter more than words, but markets are still moved by announcements. The US may be running out of scope for such moves due to strategic reserve depletion and bond market patience.
Emily Grafeo

Asks for the portfolio trade based on the Middle East conflict setup.
David Bianco

Skeptical of a quick resolution; sticking with tech where strength is unquestionable. Moderately overweight tech and communications.
Tim Stenovek

Questions what a 'good deal' with Iran looks like, referencing the JCPOA and uranium enrichment.
David Bianco

A good deal would suggest Iran doesn't want to militarize the region. Iran's track record of using oil revenue to fund chaos is poor, so trust is not earned.
Emily Grafeo

Asks how much tech equity optimism hinges on rates staying under control, given the morning's Treasury sell-off.
David Bianco

Tech is most resilient to higher rates because the debate is about return on capital, not cost of capital. Other parts of the market (staples, REITs, telecom) are more vulnerable to high multiples and rate pressure.
Tim Stenovek

Asks if DWS will buy into Anthropic or OpenAI when they go public.
David Bianco

No comment on specific actions, but intrigued by the capital raising and wealth creation, which will empower space and launch economies.
Tim Stenovek

Asks for the best way to invest in the AI build-out trade.
David Bianco

Hyperscalers will get good returns. Key semiconductor equipment plays (AMAT, LAM, KLAC, ASML, Tokyo Electron) will benefit from global data center build-out, including in China and the Middle East.

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