Stocks Gain as Buyers Step In After AI-Led Selloff

The guest sees the market as very healthy with strong earnings and too many dollars chasing too few assets. He expects EPS growth to peak in 2027, not 2025. He advises staying with momentum and avoiding contrarian or bottom-fishing trades, finding good risk-reward in utilities, staples, tech, and industrials. The recent pullback is a healthy reset.

implicit

explicit

Oil

Metals

USD

CIBC 7.0
Commercial Bank
Chris Harvey 9.0

Stocks Gain as Buyers Step In After AI-Led Selloff

ndx

The market is very, very healthy. There's still too many dollars chasing too few assets. The bid for risk is still incredibly strong.

rut

Guest says the market is healthy across the board and recommends finding good risk-reward in industrials and staples, which are heavily represented in the Russell 2000. The broad market strength implies RUT is also up.

yields

Guest says real rates are slightly higher and the rate market has become more restrictive, which is consistent with an equity pullback. This implies a cautious upward bias on yields in the near term.

Host

Asks if the large IPO (SpaceX) signals the beginning of the end, referencing late 90s IPOs of premier companies that IPO'd in 1998 but didn't peak until 2000.
Chris Harvey

The market is very healthy; there are still too many dollars chasing too few assets across credit and equity markets. The bid for risk is incredibly strong.
Host

Asks for translation of 'came back to support' regarding the Friday pullback.
Chris Harvey

The pullback means we got a little ahead of ourselves and needed a pause/refresh. More pullbacks are possible and healthy.
Host

Notes that the 2-year yield is at 4.14-4.15% and asks what higher rates in credit markets are telling us.
Chris Harvey

Real rates are slightly higher than when nominal 10-year rates were at 4.70%, making the rate market more restrictive, consistent with an equity pullback. Fed pricing in a hike is too aggressive.
Host

Asks what CIBC says to people who missed the rally and now feel they must climb on board.
Chris Harvey

CIBC has been pro-momentum all year; they advise staying away from contrarian trades and bottom fishing. Good risk-reward opportunities exist across utilities, staples, technology, and industrials.

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