Dollarhide: Big Tech Seeking Direction in Directionless Stock Market

Jake Dollarhide sees AI fatigue but expects a buy-the-dip save before Friday. The market is bifurcated: AI/mega-cap winners have driven returns while most stocks lag. With the Fed able to hike sooner, short-term yields are rising, which is a cross-cutting headwind. New retail investors increase the risk of outsized selling if no dip-buying support emerges, while higher corporate bond yields make traditional 60/40 hedges attractive.

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Charles Schwab 8.0
Asset Manager $890.00B
Jake Dollarhide 7.0

Dollarhide: Big Tech Seeking Direction in Directionless Stock Market

KOSPI

ndx

Jake describes AI fatigue, a bifurcated market, and expects a buy-the-dip save before Friday, suggesting short-term volatility rather than a clear directional trend.

rut

We have higher interest rates with small caps outperforming large caps.

wti

We have lower oil.

yields

The one-year and two-year are both over 4% now. We're pricing in a December rate hike, but could get one as early as July or September.

Host

What is going on in technology, triggered by the KOSPI sell-off last night? Is this questioning the sustainability of the AI trade?
Jake Dollarhide

I think there's AI fatigue. The question is whether the buy-the-dip mentality will come to the rescue. The decline could be exacerbated by margin calls and forced liquidations in South Korea.
Host

What does this mean for the US tech trade? We're seeing a bifurcation: software is higher, but AI infrastructure and memory are down.
Jake Dollarhide

If you take AI, tech, and energy out of the market, we're down. Last year, 377 of the S&P 500 companies were lower. The strong jobs report two weeks ago flipped the narrative: good news is now bad news because the Fed has runway to hike.
Host

Does the higher rate environment affect the tech trade? It seemed largely immune before, but now these companies are issuing bonds.
Jake Dollarhide

These tech companies were debt-free and full of cash, but now they're throwing cash at AI data centers. The Microsoft-Chevron announcement shows the energy constraints in this buildout.
Host

What would it take to see repositioning back into the Magnificent Seven? They've lost steam in the last couple of months.
Jake Dollarhide

I think we'll get a buy-the-dip save before Friday. This is a market full of contradictions: lower oil, higher interest rates, small caps outperforming large caps. The market seems confused and needs direction.
Host

What's the hedge in this market? I heard 'hedge stocks with stocks' but where does fixed income fit? You say the 60/40 portfolio is alive and well.
Jake Dollarhide

The 60/40 portfolio is alive and well. When you can get 6-7% in corporate bonds, that looks really good on days tech is down 12%. Even cash at 3.49% looks good when markets are down 10-12%.
Host

Were you surprised by Kevin Warsh addressing the market last week?
Jake Dollarhide

Kevin Warsh is a breath of fresh air. I've got money on how early it is until President Trump criticizes his own Fed chair pick—likely by August or September because the Fed won't cut in July.

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