Odds of a Fed Rate Hike May Rise, Emanuel Says

Evercore ISI strategist Julian Emanuel argues the AI-driven equity cycle remains intact long term but near-term complacency is elevated. He recommends hedging rather than selling, using cheap index protection, cash, and negative-beta sectors like energy, utilities, and health care. He sees odds of a September Fed hike nudging higher and warns that a 10-year Treasury yield pushing toward 5% would challenge stocks. - Emanuel sees long-term stocks higher but says AI does not negate cycles; a bear market will eventually happen. - Financial conditions are the loosest this century and market complacency concerns him. - He recommends cheap index protection and cash rather than cutting US equity exposure. - Negative-beta stocks, including energy, utilities, and health care, are working and dampen volatility. - He thinks the roughly 30% chance of a September Fed hike will nudge higher and could unsettle markets. - A 10-year Treasury yield above 4.75% toward 5% would be a warning zone for stocks. - His firm remains overweight the technology theme.