Chief Market Strategist on Consumer Resilience and Tech Valuations (with Paul Allen, Haidi Stroud-Watts)

Markets are moving beyond Middle East geopolitics to focus on fundamentals and the AI growth story. Consumers are 'crabby but employed' and will keep spending, though they are becoming more choiceful. Inflation is likely contained, driven by tech sector demand rather than broad-based pressures. The market needs to broaden for sustainability, but technology's 40%+ weight in the index makes it hard to ignore.

Yields sideways , short term, interviewee explicit

explicit

NDX cautious up , medium term, interviewee implicit

implicit

RUT

Oil

Metals

USD

BMO 8.0
Investment Bank $350.00B
Carol Schleif 8.5

Chief Market Strategist on Consumer Resilience and Tech Valuations (with Paul Allen, Haidi Stroud-Watts)

ndx

The interviewee says the market needs to broaden and go sideways to be sustainable, and that being 'priced for perfection' is nerve-racking. This implies a cautious view on the current narrow tech rally, though she acknowledges you 'have to be a player' given tech's index weight.

yields

We think it's too soon to go grab some of those higher rates further out the curve because you can get plenty of higher rates at the short end of the curve.

4/24/2026 10:27:19 PM	short term cautious down	7 days later	+2.54%	-1.27%
3/19/2026 4:23:39 PM	long term down	60 days later	+6.29%	-6.29%
1/21/2026 3:54:53 PM	medium term up	20 days later	-1.81%	-1.81%
9/29/2025 1:46:24 PM	short term cautious down	6 days later	+0.34%	-0.17%
8/28/2025 6:59:01 PM	medium term cautious up	20 days later	-2.91%	-1.45%

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Asks what the market is pricing in regarding the end of the Middle East conflict, given easing oil prices.

Paul Allen
Carol Schleif

Stocks have been trying for weeks to move beyond the Middle East, focusing on fundamentals and the transformational tech buildout. Higher rates gave pause last week, but equities treat higher rates differently than fixed income—a little bit of higher rates translates to higher prices and helps equity shareholders through leverage.

Markets have a short attention span for geopolitical things.
Asks about the inflation outlook and how it informs decision-making.

Paul Allen
Carol Schleif

BMO has been underweight duration and sticking to higher quality fixed income. It's too soon to grab higher rates further out the curve. Inflation will be relatively well contained and not step up much higher, as most inflation is from growth pull in the technology sector, not broad-based consumer demand.

Companies and consumers have absorbed shocks well due to 'muscle memory.'
Asks if consumer spending will change under pressure from higher oil prices and affordability issues, noting a turn in PCE data.

Haidi Stroud-Watts
Carol Schleif

Consumers don't wiggle much as long as they are employed. Aggregate numbers will stay healthy through back-to-school season, though individual retailers will be impacted. Consumers are being very choiceful, spending on entertainment but being frugal elsewhere. To pay for higher gas, they are giving up other things.

Frustrated consumers show up more at the ballot box. A small tier of consumers drives aggregate numbers. Employment has been steady, especially when stripping out retirees.
Asks how to find opportunities in tech, given that Micron is cheaply valued at 10x earnings, which could mean earnings growth has peaked.

Haidi Stroud-Watts
Carol Schleif

BMO would love to see markets broaden and go sideways to absorb gains. New highs tend to beget more new highs, but it's nerve-racking to be priced for perfection. Earnings season showed good earnings across the board, and sectors like financials have loosening regulations and record trading profits. However, technology is 40%+ of the index, so you have to be a player.

Some financials managing big positions in private credit are down, so there are pockets to look at.

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