Gabriela Santos

Santos says investors should diversify away from the pervasive AI factor after shocks like the July AI selloff, and the few areas with different return streams are Treasuries, gold, core real estate, and European equities. She argues these are the safest places to hide during AI selloffs or geopolitical unrest, while traditional factors, sectors, regions, and asset classes have become AI-correlated.

Santos says investors should diversify away from the pervasive AI factor after shocks like the July AI selloff, and the few areas with different return streams are Treasuries, gold, core real estate, and European equities. She argues these are the safest places to hide during AI selloffs or geopolitical unrest, while traditional factors, sectors, regions, and asset classes have become AI-correlated.

Santos says investors should diversify away from the pervasive AI factor after shocks like the July AI selloff, and the few areas with different return streams are Treasuries, gold, core real estate, and European equities. She argues these are the safest places to hide during AI selloffs or geopolitical unrest, while traditional factors, sectors, regions, and asset classes have become AI-correlated.

Santos says investors should diversify away from the pervasive AI factor after shocks like the July AI selloff, and the few areas with different return streams are Treasuries, gold, core real estate, and European equities. She argues these are the safest places to hide during AI selloffs or geopolitical unrest, while traditional factors, sectors, regions, and asset classes have become AI-correlated.

AI concentration risk is everywhere and growth rates will eventually decelerate, leading to a correction or fatigue. Investors should actively build diversification away from the AI factor by allocating to Treasuries, gold, real estate, European equities, emerging markets, and Japanese equities.

AI concentration risk is everywhere and growth rates will eventually decelerate, leading to a correction or fatigue. Investors should actively build diversification away from the AI factor by allocating to Treasuries, gold, real estate, European equities, emerging markets, and Japanese equities.

Elevated geopolitical uncertainty and several simultaneous conflicts are driving a second massive secular theme in security and resilience, with governments materially increasing defense and infrastructure spending, which is also contributing to long-end debt issuance and volatility.

Elevated geopolitical uncertainty and several simultaneous conflicts are driving a second massive secular theme in security and resilience, with governments materially increasing defense and infrastructure spending, which is also contributing to long-end debt issuance and volatility.

The AI buildout remains the most important theme across capital markets with $4.5 trillion of capex spending to build out compute infrastructure, and profits are already reflecting this massive super cycle.

In an economy that is good enough, banks are attractive. Earnings are strong from capital markets, loan growth is picking up including C&I loans, the regulatory environment is good, and defaults/delinquencies are very low.

Investors are enthusiastically following the money from hyperscalers to the entire AI ecosystem supply chain. Earnings growth is extraordinary: 100% for semiconductors, 40% for hardware and power. This AI CapEx surge is funding strong growth in public equities across these sectors.

Investors are punishing "Mag 7" companies for high AI Capex if revenue doesn't immediately follow, while simultaneously realizing that *someone* has to build the physical infrastructure for AI. This sentiment shift drives a rotation away from concentrated tech exposure into the "beneficiaries" of the spend. If AI requires massive power and physical build-outs, the companies providing the raw materials, energy, and industrial machinery will capture the Capex dollars regardless of which AI model wins. Long the infrastructure layer (Industrials, Materials, Utilities) as a hedge against Tech concentration. A broader economic slowdown reducing demand for commodities and energy.

Investors are punishing "Mag 7" companies for high AI Capex if revenue doesn't immediately follow, while simultaneously realizing that *someone* has to build the physical infrastructure for AI. This sentiment shift drives a rotation away from concentrated tech exposure into the "beneficiaries" of the spend. If AI requires massive power and physical build-outs, the companies providing the raw materials, energy, and industrial machinery will capture the Capex dollars regardless of which AI model wins. Long the infrastructure layer (Industrials, Materials, Utilities) as a hedge against Tech concentration. A broader economic slowdown reducing demand for commodities and energy.