Mag 7 spending cycle, AI adoption, and portfolio rebalancing (with Tom Keene; Lisa Mateo)

Skelly sees the Mag 7 spending/capex cycle plateauing, which is a positive signal for the rest of the market as AI adoption broadens. He advocates deploying cash now, adding to value ideas (financials, healthcare) and international themes (Japan). He views policy shocks as 'pop-up ads' and expects midterms to cap upside near-term.

Yields sideways , short term, interviewee implicit

implicit

NDX cautious up , medium term, interviewee explicit

explicit

RUT up

Oil

Metals

USD

Morgan Stanley 9.0
Investment Bank $1600.00B
Daniel Skelly 8.0

Mag 7 spending cycle, AI adoption, and portfolio rebalancing (with Tom Keene; Lisa Mateo)

ndx

We would be deploying today. Mag 7 is one part of a multi-prong strategy.

31 calls

+5

slightly better than random

5/15/2026 1:33:06 AM	medium term up	21 days later	+1.45%	+1.45%
4/30/2026 3:32:46 PM	short term up	5 days later	+3.21%	+3.21%
4/24/2026 8:25:21 PM	short term up	7 days later	+1.27%	+1.27%
4/23/2026 8:05:33 PM	short term cautious down	5 days later	-0.43%	+0.21%
3/31/2026 9:03:17 PM	medium term up	20 days later	+10.24%	+10.24%
12/19/2025 7:40:58 PM	medium term up	21 days later	+1.28%	+1.28%
12/15/2025 10:20:08 PM	medium term up	20 days later	+1.07%	+1.07%
12/2/2025 5:18:13 PM	long term up	61 days later	+0.52%	+0.52%
11/28/2025 6:46:36 PM	short term up	7 days later	+1.12%	+1.12%
11/25/2025 1:41:12 AM	medium term up	20 days later	-0.41%	-0.41%
11/25/2025 12:34:15 AM	short term up	5 days later	+0.42%	+0.42%
11/24/2025 4:43:34 PM	long term up	62 days later	+2.78%	+2.78%
11/22/2025 1:57:04 AM	medium term up	21 days later	+0.78%	+0.78%
11/14/2025 8:08:25 PM	medium term up	21 days later	+3.34%	+3.34%
11/7/2025 11:22:11 PM	short term up	7 days later	-3.17%	-3.17%
11/4/2025 2:20:08 PM	medium term cautious down	20 days later	-2.35%	+1.17%
11/3/2025 5:11:21 PM	medium term up	20 days later	-2.21%	-2.21%
10/31/2025 9:47:56 PM	short term up	7 days later	-1.39%	-1.39%
10/31/2025 3:02:13 PM	medium term cautious up	21 days later	-4.23%	-2.12%
10/21/2025 3:40:54 PM	medium term up	20 days later	+2.63%	+2.63%
10/17/2025 9:41:10 AM	medium term cautious up	22 days later	+3.20%	+1.60%
10/14/2025 9:08:43 PM	medium term up	20 days later	+2.79%	+2.79%
10/2/2025 9:07:28 AM	medium term up	20 days later	+1.26%	+1.26%
9/23/2025 3:45:06 PM	medium term up	20 days later	+0.31%	+0.31%
9/22/2025 11:26:50 PM	short term cautious up	6 days later	+0.13%	+0.06%
9/8/2025 9:33:32 PM	short term up	6 days later	+1.90%	+1.90%
9/4/2025 5:07:54 PM	medium term up	20 days later	+3.15%	+3.15%
9/4/2025 9:41:48 AM	medium term cautious down	20 days later	+3.15%	-1.57%
8/18/2025 11:36:07 PM	medium term up	20 days later	+1.61%	+1.61%
8/7/2025 5:16:29 PM	medium term up	20 days later	+0.39%	+0.39%
8/5/2025 10:59:28 PM	medium term up	20 days later	+0.90%	+0.90%

Show all 31 ndx results

rut

Skelly says the Mag 7 spending plateau is a positive signal for the rest of the market (80% of S&P attribution is in IT hardware/power, not AI adoption). This implies a broadening rally that benefits small-cap indices like RUT.

yields

Skelly interprets Warsh's policies as a 'wash' (hawkish on short rates, balance sheet reduction), suggesting no strong directional move in yields near-term.

Daniel Skelly

The big cloud overhanging Mag 7 has been excessive spending. We think this cycle looks like the first half of 1995; semis peaked, took a 50% drawdown, then did nothing for a year, but chronologically we were in 96-97 with four years left.

He compares current AI capex cycle to historical patterns in semis and internet/shale cycles.
Daniel Skelly

We would be deploying today. Mag 7 is one part of a multi-prong strategy; we'd also add to value ideas like financials and healthcare, which should be some of the best AI adopters over time.

He also advocates for international equity positions (Japan) and hedging equity risk with real assets and long-short hedge funds.
Daniel Skelly

The market has been treating policy shocks as pop-up ads. The next pop-up ad is the midterms, which probably caps some of the upside from the 20% move off the March low.

He notes the economy has shifted from inflation/rate-sensitive vectors toward a more inelastic economy (goods to services, high-income spending, AI spending).
Daniel Skelly

On the Fed: we had all been expecting cuts this year, we've been priced out of that. We're most excited about restructuring the Fed's communications and reducing the balance sheet; we interpret that as somewhat of a wash.

He references Kevin Warsh's hawkish front on short rates and getting back to 2% inflation.
Daniel Skelly

On rebalancing: be in touch with your advisor quarterly/yearly and think about original plan vs effective weightings. Today, financials, Mag 7, Japan have drifted lower and we would be rebalancing higher into them.

He emphasizes patience and the courage to stay with positions during drawdowns.
Daniel Skelly

When the Mag 7 spending/capex cycle plateaus, it's not a negative signal overall. Ironically, it's the most positive signal for the rest of the market because 80% of S&P attribution this year is in semi/IT hardware and power, not the adoption wave of AI.

He sees the adoption wave of AI as the next positive catalyst for the broader market.

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