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Feb 17, 2026
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LONG
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"I would certainly be picking up names that were impacted by this theory of the market for lemons... massive opportunity for stock picks... particularly in the AI world and in the world impacted by AI." The recent sell-off in software and AI has been indiscriminate (correlations went to 1), dragging down high-quality companies ("peaches") alongside low-quality ones ("lemons"). This mispricing allows investors to buy companies with strong balance sheets and leadership at depressed valuations. Buy high-quality AI and software stocks that have been oversold. Focus on bottom-up selection (strong balance sheets) rather than buying the whole sector. Continued sector-wide rotation out of tech; failure of specific companies to differentiate themselves from the "lemons." |
CNBC
Expect a lot of volatility as we go forward, ...
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Feb 17, 2026
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SHORT
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"From a valuation perspective, and from a fundamental perspective, it's very hard to justify a 4% ten year... I think you will see it going back towards four, four and a half... with the average being closer to 450." El-Erian argues that current yields are too low relative to economic fundamentals. He forecasts a mean reversion where yields rise toward 4.50%. Since bond prices move inversely to yields, a move from ~4.00% to 4.50% implies a decline in Treasury bond prices. Short duration or underweight Treasuries in anticipation of rising yields. The administration may implement some form of yield curve control if mortgage rates spike too high, capping yields artificially. |
CNBC
Expect a lot of volatility as we go forward, ...
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Feb 17, 2026
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LONG
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"This is a market that... will continue to be defined by three words: volatility, dispersion... Economic outcomes... will be less a function of economic and commercial logic and more a function of national security, geopolitics." The stabilizing era of globalization and the "Washington Consensus" has ended. The new regime is driven by fragmentation and political priorities (geoeconomics), which inherently creates more friction and market shocks than the previous efficiency-driven era. Long volatility as a structural hedge against increased geopolitical and economic dispersion. Periods of artificial calm or central bank interventions suppressing volatility temporarily. |
CNBC
Expect a lot of volatility as we go forward, ...
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Feb 09, 2026
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NEUTRAL
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The market is moving away from the 2023/2024 dynamic where investors "fell in love with anything that had an AI label." We are entering a "differentiation phase." Investors can no longer buy the whole sector blindly. They must scrutinize individual business models (e.g., comparing Google to OpenAI) because FOMO is leading to potential over-investment. Bond market spreads have widened slightly for "hyperscalers" (large cloud/AI companies), signaling that credit markets are becoming cautious about spending levels. Missing out on the broader sector momentum if the "productivity boom" accelerates faster than cost concerns. |
CNBC
Volatility, dispersion and fragmentation are ...
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Feb 09, 2026
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LONG
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El-Erian agrees with the view that the Federal Reserve has room to lower interest rates. AI-driven productivity enhancements will increase the economy's "safe speed limit" (non-inflationary growth potential). This allows the economy to grow without overheating, giving the Fed permission to cut rates without sparking inflation. Historical precedents of productivity booms allowing for easier monetary policy. If AI adoption ("diffusion") is slower than expected, productivity gains won't materialize, keeping inflation and rates higher. |
CNBC
Volatility, dispersion and fragmentation are ...
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Feb 09, 2026
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AVOID
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El-Erian observes a "shakeout" in speculative assets like Bitcoin and Silver, noting he is not a big investor in Bitcoin because he sees it as purely technical and highly volatile. He uses the analogy of "tourist investors" (speculators) vs. "resident investors" (long-term holders). Currently, there are too many tourists and not enough residents to absorb selling pressure. Until the institutional base matures to resemble the Gold market, volatility will remain extreme. Bitcoin dropping under 70,000 and the recent "de-leveraging" in speculative markets. Unexpectedly rapid institutional adoption could stabilize the price sooner than expected. |
CNBC
Volatility, dispersion and fragmentation are ...
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