Kevin Gordon

Small-cap outperformance is supported by a genuine turnaround in the earnings profile of the cohort. The rotation into small caps is sustainable as long as the U.S. economy remains stable and the labor market does not derail the recovery. The Russell 2000's gains reflect this fundamental improvement.

If you believe it is starting to diffuse throughout the economy, you're seeing benefits of this technology, it may not be the best from a cap weighted index perspective. If you thought tech and communication services with the big drivers and players... they are taking more of a backseat giving way to the rest of the market. The initial phase of the AI trade heavily rewarded the mega-cap tech companies building the infrastructure. The next phase will benefit the broader economy (non-tech sectors) that adopt AI to increase productivity and expand profit margins. Long equal-weight S&P 500 indices to reduce concentration risk in mega-cap tech and gain exposure to the broader market's impending productivity boost. AI adoption in non-tech sectors takes longer than expected to materialize into actual earnings growth, or mega-cap tech continues to monopolize all AI-related profits.

Japan is a poster child for a country where inflation is running away a bit and the central bank has been hesitant to tighten. The recent coordinated intervention and the 'buy yen' signal from Treasury Secretary Bessent, combined with fundamental pressures, suggest the yen is poised to strengthen.

We came into the year relatively constructive outside of the U.S. from a stock market perspective... given growth around the world higher to this. Especially in Europe and parts of Asia. The weak dollar story was a huge support to ex-U.S. stocks. International developed markets are benefiting from a combination of accelerating relative economic growth and a weakening US dollar, which boosts the value of foreign earnings when translated back to USD. Long broad international or developed market ETFs to capture the geographic diversification and currency tailwinds that are currently outpacing US domestic growth. A sudden spike in the US dollar due to geopolitical safe-haven flows, or a severe escalation in the Middle East conflict that disproportionately hurts European energy markets.

We came into the year relatively constructive outside of the U.S. from a stock market perspective... given growth around the world higher to this. Especially in Europe and parts of Asia. The weak dollar story was a huge support to ex-U.S. stocks. International developed markets are benefiting from a combination of accelerating relative economic growth and a weakening US dollar, which boosts the value of foreign earnings when translated back to USD. Long broad international or developed market ETFs to capture the geographic diversification and currency tailwinds that are currently outpacing US domestic growth. A sudden spike in the US dollar due to geopolitical safe-haven flows, or a severe escalation in the Middle East conflict that disproportionately hurts European energy markets.