Name: Here's how to navigate the "Run It Hot" trade
Uploaded: 2026-01-22T18:03:27+00:00
Duration: 527 s

Speakers

Josh Brown — CEO, Ritholtz Wealth Management

Jenny Harrington — CEO, Gilman Hill Asset Management

Jim Lebenthal — Partner, Cetera Investment Management

David Solomon — Chairman and CEO, Goldman Sachs

Charles Scharf — CEO, Wells Fargo

Scott — Host

Summary

The Investment Committee discusses the market's sharp rebound after Trump's tariff threat, focusing on the 'run it hot' trade and broadening market leadership. Members highlight small caps, transports, energy, and other non-AI sectors as beneficiaries, while mega-cap tech and AI leaders face slower earnings growth. The group debates whether the rotation is driven by stronger economic growth or simply positioning shifts.

Markets rallied back after Tuesday's tariff-related selloff.
Josh Brown likes broadening leadership in small caps, transports, and energy.
Josh Brown warns S&P 500 concentration may cap index returns.
Jenny Harrington holds transport names but views the move as rotation; she discusses UPS's valuation and transition.
Jim Lebenthal expects earnings growth to shift from AI mega-caps to small caps and non-Mag-7 sectors.
David Solomon and Charles Scharf see potential for stronger-than-expected economic growth.
The committee frames the 'run it hot' trade as a rotation away from AI/data-center dominance.

Ideas

Josh Brown CEO, Ritholtz Wealth Management 1:31

Small caps, transports, energy lead broadening rotation.

Brown is bullish on broadening market breadth and the rotation away from data-center/AI mega-cap leadership. The S&P 600 Small Cap Index is up 8% year-to-date versus only 0.5% for the S&P 500, transports are in the lead, and energy has woken up. These areas are underowned, trade at lower multiples, and have room to run as investors look beyond names like Oracle and Microsoft.

Jenny Harrington CEO, Gilman Hill Asset Management 4:10

Transport holdings benefit from market rotation.

Harrington holds transport names JetBlue, XPO, Uber, and UPS and sees their recent move as part of a broader market rotation rather than a pure transport fundamental story. They are economically sensitive and have oil/gasoline as a major input cost; after lagging last year, they are participating as positioning shifts, which she finds encouraging for market breadth.

Jenny Harrington CEO, Gilman Hill Asset Management 5:16

UPS transition and low valuation attract hope.

UPS is down 17% over the last 12 months but up 11% year-to-date, trades at about 15 times earnings, and its earnings growth is not amazing but not terrible. Harrington thinks it is in the middle of a transition and that investors are finally giving it positive hope instead of ignoring it for not being AI-centric.

Josh Brown CEO, Ritholtz Wealth Management 6:05

S&P 500 may lag as concentration unwinds.

The S&P 500 is highly concentrated—about 40% in a handful of big-cap tech and communication-services names—and Nvidia alone is as large as the 300 smallest S&P 500 components. If even a few points of market cap rotate out of Meta, Microsoft, or Nvidia, hundreds of smaller names can benefit. Brown thinks the S&P 500 may do very little this year while other indices can gain double digits.

Jim Lebenthal Partner, Cetera Investment Management 7:49

Earnings growth rotates to small caps, non-AI.

The market is anticipating much better earnings growth from small caps and the other 493 stocks outside the Mag-7, with financials, industrials, and possibly energy starting to pick up. At the same time, AI stock earnings growth is decelerating—Alphabet more than doubled net income and EPS over the last three years and it will be hard to sustain that pace—so the relative earnings advantage is shifting away from AI mega-caps.

Jim Lebenthal Partner, Cetera Investment Management 7:49

Earnings growth rotates to small caps, non-AI.

Here's how to navigate the "Run It Hot" trade

Summary

Ideas

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