Jack Caffrey

Earnings are further accelerating this year, with more material earnings gains happening away from the concentrated AI-related equities. The broader market (S&P 500) should benefit as companies find a way to drive profitability, supported by high nominal GDP growth and the ability to pass through surcharges (price hikes) despite inflation and geopolitical uncertainty.

Oil prices are wrong. The Strait of Hormuz blockade remains 100% effective, physical inventories are declining even if crude flows resume tomorrow, supplies are 45 days away from demand centers. There are very few barrels to be bought, creating a scenario where oil could spike to $125-150. Large oil companies are slow to increase supply; the world needs more non-Hormuz production, which requires higher prices. The oil futures curve should be trending lower but the physical shortage is severe, and traders are ignoring real declines in inventory.

Capital markets providers will become vitally important to facilitating growth as technology companies transition away from self-funding; additional drivers include yield curve stabilization, regulatory relief for banks, and increased buyback announcements.

Transportation companies benefit from consolidation, asset base formation, and potential pricing power, playing into the overall U.S. economy and the 'revenge of the physical' theme.

Investors are rotating into stable growth names and healthcare, which is not fully tied to AI spending trends.