Markets Faces Hotter, Shorter Cycles

Summary

Mike Wilson argues that post-COVID fiscal dominance ended the 40-year bond bull market and created a run-hot regime of shorter cycles and higher inflation. He sees quality rotation supporting the S&P 500 and large-cap quality over international equities, while recommending energy stocks as an oil-risk hedge. He views rising oil as the key near-term equity risk and interprets the gold and crypto move as a signal of expected policy intervention.

• COVID policy response ended the 40-year disinflationary regime.
• Strong nominal GDP growth, not just deficits, is driving rates higher.
• Bonds are no longer a reliable tailwind for risk assets.
• Quality factors are outperforming and support S&P 500 leadership.
• Brent crude is flagged as the main near-term risk for equities.
• Energy stocks are recommended as a hedge against oil risk.
• Gold and crypto moves are read as expecting larger policy intervention.