Dan Skelly

Health care is a laggard sector that can benefit from rotation out of overconcentrated AI leaders, offering diversification.

Despite market attention shifting away from the Magnificent Seven at times, the group could reassert leadership as AI monetization improves and new growth opportunities emerge, driven by their monetization potential.

The speaker explicitly states, "Stick with the international trade... whereas the AI centric optimism has now ceded to concern, that's obviously benefiting international." He also cites "policy and fiscal tailwinds helping Japan, helping Latin America." As the "AI trade" in the US becomes crowded and faces skepticism (disruption fears), capital is rotating into undervalued markets. Europe and Japan offer a "valuation discount" combined with new fiscal catalysts that were previously absent, making them the primary beneficiaries of the US tech pause. LONG International markets as the momentum baton passes from US Tech to global value/cyclicals. Global recession or a resurgence of US exceptionalism driving the dollar higher.

Financials and Health Care are value sectors that will become some of the best AI adopters over time, offering a longer-term play.

Skelly states, "We have been recommending Gold for over two years and we like that trade." Yardeni notes Gold is a "very good diversifier." In a "global reflation" environment with geopolitical instability and doubts about US fiscal health/tech valuations, Gold acts as the ultimate non-correlated hedge. LONG GOLD. Real rates rising significantly or a strong dollar.

Crypto is currently in a 'crypto winter' that will eventually thaw, and going into next year as the next halving approaches, the crypto tape should improve, presenting a better investment environment for Bitcoin and digital assets.

International equities, particularly Japan, are advocated for diversification and as a rebalancing opportunity after drifting lower in recent months, providing exposure outside a concentrated US market.

As part of a diversification rotation away from the crowded AI trade, regional banks are attractive laggards to rotate into.

AI is a persistent and key thematic driver of productivity improvements and innovation in the U.S., similar to historical innovation cycles, and will continue to be a major market narrative.

The U.S. stock market has bottomed after a 9% correction, supported by underlying productivity boom, strong earnings, geopolitical de-escalation, and a peak in volatility as indicated by the VIX decline.

The speaker explicitly states, "Stick with the international trade... whereas the AI centric optimism has now ceded to concern, that's obviously benefiting international." He also cites "policy and fiscal tailwinds helping Japan, helping Latin America." As the "AI trade" in the US becomes crowded and faces skepticism (disruption fears), capital is rotating into undervalued markets. Europe and Japan offer a "valuation discount" combined with new fiscal catalysts that were previously absent, making them the primary beneficiaries of the US tech pause. LONG International markets as the momentum baton passes from US Tech to global value/cyclicals. Global recession or a resurgence of US exceptionalism driving the dollar higher.

The speaker highlights "defense spending and a revamping of the military industrial complex" in Europe and mentions a potential "Marshall Plan type of equivalent" for post-Ukraine recovery. Geopolitical instability is forcing a structural shift in European fiscal policy toward re-militarization. This creates a guaranteed revenue stream for defense contractors and infrastructure firms, decoupled from the volatility of consumer tech or AI software. LONG Defense (specifically with European exposure) as a fiscal policy play. De-escalation of geopolitical conflicts leading to budget cuts.