Jason Shapiro

AI stocks have fundamental and momentum leadership.

Shapiro observes a clear market rotation where "materials are leading" and "energies are leading," while the Mag 7 (Tech) are lagging. He explicitly states, "I love the materials trade." This is a second-order AI trade. The market realizes that to build out AI, you need physical inputs (energy, copper, construction materials) which are in shortage. The "19th Century businesses" are now the growth engine for the "21st Century innovators." LONG Materials (XLB), Energy (XLE), and Miners (GDX) as they are under-owned by the S&P 500 relative to Tech. A deep global recession crushing demand for physical commodities.

Shapiro notes there is "one of the largest ever short positioning in TLT in history." Simultaneously, despite the "Mag 7" needing to borrow massive amounts of money (which should hurt bonds), bond prices are rising and spreads haven't budged. When a market moves in the opposite direction of what "should" happen (fundamentals say down, price goes up) combined with extreme crowded short positioning, it indicates a violent reversal. The shorts are trapped and will be forced to cover, driving prices higher regardless of the macro narrative. LONG TLT to front-run the inevitable short squeeze. Inflation re-accelerating significantly could force yields higher despite positioning.

Shapiro observes a clear market rotation where "materials are leading" and "energies are leading," while the Mag 7 (Tech) are lagging. He explicitly states, "I love the materials trade." This is a second-order AI trade. The market realizes that to build out AI, you need physical inputs (energy, copper, construction materials) which are in shortage. The "19th Century businesses" are now the growth engine for the "21st Century innovators." LONG Materials (XLB), Energy (XLE), and Miners (GDX) as they are under-owned by the S&P 500 relative to Tech. A deep global recession crushing demand for physical commodities.

Shapiro observes a clear market rotation where "materials are leading" and "energies are leading," while the Mag 7 (Tech) are lagging. He explicitly states, "I love the materials trade." This is a second-order AI trade. The market realizes that to build out AI, you need physical inputs (energy, copper, construction materials) which are in shortage. The "19th Century businesses" are now the growth engine for the "21st Century innovators." LONG Materials (XLB), Energy (XLE), and Miners (GDX) as they are under-owned by the S&P 500 relative to Tech. A deep global recession crushing demand for physical commodities.