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Feb 18
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SHORT
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Sophie Huynh
Reporter, The Block
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BNP Paribas has been Long Hardware / Short Software for over a year. It is unclear which software companies will survive AI disruption (zero terminal value risk for some), whereas hardware/memory demand is certain. The market is not yet pricing in the full "displacement" risk for white-collar software tools. SHORT SOFTWARE SECTOR. AI adoption happens slower than expected, allowing legacy software to adapt. |
Bloomberg Markets
Lagarde Reported to Leave ECB Before Term End...
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Feb 17
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AVOID
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Julie Biel
Portfolio Manager, Kayne Anderson Rudnick
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Biel argues software businesses that are just "optimizing" or "automating" without proprietary data are "ripe for disruption." Lee (Oaktree) adds that private credit has a "much higher bar" for software, specifically avoiding "coding companies" that can be displaced by AI. The "AI Scare Trade" is real. Companies that previously enjoyed "safe haven" status are now viewed as at-risk of obsolescence. If private credit pulls back lending to these firms, their liquidity and growth stifle. Avoid generic/legacy software stocks. AI adoption might be slower than expected, allowing legacy tech to adapt. |
Bloomberg Markets
Stocks Gain as Tech Holds Up; Bonds Steady | ...
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Feb 16
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AVOID
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Adam Lynn
Market Strategist / Guest Speaker
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"We've seen some of these asset management companies, these software companies, which is getting attacked... people are going to park in areas which aren't as exposed." The market is punishing sectors "adjacent" to the crowded AI trade that do not have the same earnings durability. As investors rotate into cyclicals (Europe) or pure hardware (Korea), high-multiple US software and asset managers are becoming sources of funds (sold to buy other assets). AVOID/SHORT due to rotation risk and negative price action ("getting attacked"). A resurgence in US bond yields dropping could reignite a bid for long-duration software assets. |
Bloomberg Markets
US Stocks to Lag European Peers on AI
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Feb 13
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LONG
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Ryan Detrick
Chief Market Strategist, Carson Group
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"Short interest on that [XLK] has absolutely soared over the past month... Software valuations cheapest [they have] been since 2013." High short interest often acts as a contrarian indicator, fueling potential short squeezes when sentiment turns. Combined with historically low valuations in the software sub-sector, the current "fear" provides an attractive entry point for long-term bulls. LONG. Use the current tech pullback to accumulate software names. Continued momentum in the "tech pullback" or higher rates compressing multiples further. |
CNBC
Markets weigh geopolitics, tariffs and tech p...
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Feb 12
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SHORT
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Tim Sandvik
Anchor, Bloomberg
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C.H. Robinson (CHRW) is down ~14% and the "scare trade continues to make its way through different sectors... software this week, financials... logistic companies apparently are going to lose out to AI." The market is currently pricing in a "terminal value risk" for industries viewed as displaceable by AI agents. Investors are selling first and asking questions later. This momentum suggests continued downside for legacy logistics brokers and "system of record" software companies perceived as vulnerable to AI automation. SHORT (Sentiment/Thematic Rotation). Market realizes the AI displacement threat is overblown/too distant. |
Bloomberg Markets
Software Selloff Deepens on AI Fears | Closin...
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Feb 12
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AVOID
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Julian Emanuel
Evercore ISI
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Emanuel notes that Software, Legal, and Financial professions are viewed as "most likely to be disrupted." Financials are underperforming despite the bull market. The market is pricing in existential risk for business models based on billable hours or code generation. Until these companies prove they can monetize AI rather than be replaced by it, multiples will compress. AVOID sectors in the crosshairs of the "AI Heat Seeking Missile." Oversold conditions could lead to a sharp relief rally if earnings prove resilient. |
Bloomberg Markets
Bloomberg Surveillance 2/12/2026
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Feb 11
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LONG
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The speaker notes a "real shakeout" in software last week but regards it as an "opportunity for investors to take exposure." Contrary to fears that AI will disrupt software companies, the speaker argues AI "empowers them" by shortening coding times and enabling workflow efficiencies. Therefore, the dip is a chance to buy premium assets at better prices, specifically targeting cloud infrastructure and cyber defense subsectors. LONG. Continued market perception of AI as a disruptor rather than an enabler; higher valuations compared to the broader IT sector. |
Bloomberg Markets
Software Selloff Is a Chance to Increase Expo...
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Feb 11
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AVOID
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Joe Terranova
Investment Committee Member
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"What's troubling the market today... is a little bit of a rollover in Crypto... and Software... looks like Software is kind of rolling over a little bit." The immediate post-jobs report reaction is hitting high-duration, high-beta assets hardest. The "momentum" factor is shifting away from these speculative sectors toward quality/value. AVOID. Short-term weakness is visible in these specific momentum pockets. A sudden drop in yields could reignite the bid for high-duration tech and crypto assets. |
CNBC
Here's how to trade around the hot jobs repor...
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Feb 08
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SHORT
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Bob Elliott
Substack author, Nonconsensus
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Bob Elliott observes that "momo favorite software stocks implode and old school value companies surge." This indicates a significant and ongoing market rotation away from high-growth, high-multiple software companies towards more fundamentally sound, potentially undervalued "old school value" companies. This trend, if sustained, offers a relative value opportunity. Initiate a pair trade: Short an ETF tracking software or growth stocks (e.g., IGV, ARKK) and Long an ETF tracking value stocks (e.g., RPV, VTV). The rotation could reverse quickly, driven by a renewed appetite for growth or a broader market downturn that impacts all equities. Value stocks could become overbought. |
Nonconsensus
The Week Ahead 2026.02.08
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