Andrew Slimmon

"We're having a strengthening of the dollar... on a relative basis, you're seeing more money come back into kind of the very large US stocks." A strong USD acts as a headwind for international stocks and commodities (which are priced in dollars). As the "weak dollar" consensus trade unwinds, capital rotates out of Emerging Markets/Europe and seeks safety and growth in US Large Caps. Long US Large Cap Equities as a beneficiary of capital rotation driven by currency strength. The US Dollar weakens unexpectedly; US earnings disappoint.

Financials have reported very good earnings but their stocks have not performed well as the market focused on AI beneficiaries, making them an attractive non-correlated position that can inoculate a portfolio against drawdowns in crowded AI trades.

He says the opportunity set is shifting outside the US: for years non-US equities failed to beat expectations despite cheaper valuations, but now his team is finding more companies outside the US outperforming expectations. He believes a global framework probably outperforms a pure US framework as it did last year.

Within ex-US markets, he specifically highlights Japan because he is noticing more interest in enhancing shareholder value, including share buybacks, which supports the Japanese equity opportunity set.

AI beneficiaries—memory/chip stocks and semiconductor equipment manufacturers—are not expensive despite being crowded. Earnings revisions have validated their valuations. Sharp selloffs driven by momentum traders are healthy and present buying opportunities because AI compute demand is very high and supply is still catching up, and the pullback deflates euphoria before it becomes a bubble.

AI beneficiaries—memory/chip stocks and semiconductor equipment manufacturers—are not expensive despite being crowded. Earnings revisions have validated their valuations. Sharp selloffs driven by momentum traders are healthy and present buying opportunities because AI compute demand is very high and supply is still catching up, and the pullback deflates euphoria before it becomes a bubble.

Oil prices are unlikely to reach $150; the typical pattern is a retracement to around $80, and one should be bearish on oil when it gets close to triple digits because more supply tends to come online, preventing sustained high prices.