Macro strategist on rotation and AI cycle (with Heidi Stroudwatt, Shery Ahn)

David Savage sees the rotation out of chipmakers as a healthy consolidation after a one-way AI rally. He notes resilient US growth, a pullback in oil helping cyclicals, and a positive setup ahead of jobs data, though Middle East risks remain.

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Bloomberg 5.5
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David Savage 6.5

Macro strategist on rotation and AI cycle (with Heidi Stroudwatt, Shery Ahn)

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Savage describes the chipmaker selloff as a 'consolidation' after a straight-up rally, implying near-term sideways movement for tech-heavy indices.

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Savage notes small caps were up over a percent and that AI capex is feeding into cyclicals, suggesting a positive near-term outlook for small caps.

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Savage says the pullback in oil is helping cyclicals and that oil price jumps have been more muted recently, implying a cautious downside view.

Asks whether the rotation out of chipmakers is a broadening of the market or a temporary blip in the AI cycle.

Heidi Stroudwatt
David Savage

The selloff in US chipmakers is likely a consolidation after a straight-up rally, not a trend reversal. Financials and healthcare led while tech lagged, but some Mag 7 names still showed strength.

Inflation is accelerating but growth is resilient. The pullback in oil helps cyclicals and small caps. The backdrop is positive for the US, but Middle East escalation could change things.
Notes the Dow outperforming the Nasdaq by 1000 points and asks if this reflects the fundamental backdrop.

Heidi Stroudwatt
David Savage

The rotation is tied to oil's pullback and resilient growth. AI capex is feeding into cyclicals and small caps. Bond yields stabilized partly due to muted oil price jumps.

If Brent pushes back over 100 or negative Middle East headlines emerge, the picture could change.

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