Barry Knapp: I Cut Tech. Here's Why.
Спикеры
Barry Knapp
— Управляющий партнер, Ironsides Macroeconomics
Barry Knapp details his portfolio shift away from technology stocks as AI capex growth peaks, and positions into industrials, energy, materials, and financials in anticipation of a manufacturing renaissance and a Fed policy pivot under Kevin Warsh. He warns of a possible 10% equity correction from rising real rates and highlights long-term fiscal risks, while expecting inflation to stabilize around 2.5%.
- U.S. economy remains K-shaped, benefiting large fixed-rate borrowers and asset owners while pressuring floating-rate borrowers.
- AI capex growth is peaking: hyperscaler capex/cash flow hit 90%, prompting underweight in Technology and Communication Services.
- Overweight Industrials, Energy, and Materials on a manufacturing renaissance and broad capital investment cycle beyond AI.
- Financials and regional banks are favored due to expected Fed policy shift (lower short rates, balance sheet unwind, deregulation) and cheap valuations.
- Consumer sectors avoided because margins are squeezed by tariffs and energy costs; Walmart singled out as expensive.
- Rising real rates could spark a 10% S&P 500 correction, justifying a decent cash position.
- Inflation likely to stabilize around 2.5%; the 2% target is viewed as a mistake, and long-term fiscal sustainability is the biggest worry.
Идеи
AI capex peak drives tech underweight
AI capital spending growth is likely to slow; capex as a percent of cash flow for the big spenders reached 90%, similar to prior peaks in telecom (2000) and energy (2014-15). After reporting higher capex, Google, Meta, Microsoft, and Amazon saw stock price declines, signaling market skepticism. This rate-of-change slowdown leads him to underweight the Technology sector (25% vs. 37% index) and Communication Services (5% vs. 10%).
Manufacturing renaissance lifts industrials, energy, materials
Believes a manufacturing renaissance and broad capital investment cycle beyond AI is coming, leading him to overweight industrials, energy, and materials.
Financials benefit from Warsh Fed plan
Kevin Warsh's likely Fed plan to cut the policy rate, unwind long-term securities holdings, and deregulate banks will steepen the yield curve and create a good environment for the banking sector, so he is overweight financials.
Avoid consumer sectors on margin pressure
Consumer companies face margin pressure from tariffs, higher energy prices, and the K-shaped economy, so he is underweight Consumer Staples and Consumer Discretionary until Fed policy rebalances conditions for households.
Rising real rates may trigger 10% correction
Rising real rates could tighten financial conditions and trigger a typical midterm-year 10% S&P 500 drawdown, so he holds a decent cash position.
Walmart overvalued with margin pressure
Walmart trades at a high multiple (~30x) while earnings grow only ~5%, with margins under pressure from tariffs and energy costs, making it an expensive defensive trade.
Regional banks cheap, poised for gains
Regional banks have performed well this year but still look cheap; investors do not fully appreciate how much the deregulation regime and yield curve steepening will improve their profitability.
