US Stocks to Continue Lagging Peers: 3-Minutes MLIV

"We're seeing the software at the eye of the storm and we're seeing something peripheral or adjacent to it being taken out... American Express down over 6%... Equal-weight S&P closed lower." The market is pricing in "displacement effects" (likely AI disruption) which is negatively impacting software and service companies (like AXP). When combined with "tariff anxiety" and "tape bombs," the broad US market (represented by Equal-Weight and Small Caps) is structurally weak compared to global peers. Short or Avoid US Software and broad US indices. A sudden resolution to tariff uncertainty or a rotation back into US growth stocks.

"Some of these kind of shovel and pick a pack stocks, you know, you take it to South Korea and Kospi, they're benefiting." While US software suffers from disruption, the hardware manufacturers (memory/semiconductors) located in South Korea are the "shovels" enabling the technology. Investors are rotating out of the disrupted (US Software) and into the enablers (Korean Hardware) as a hedge against US policy risk. Long South Korean equities as a relative value play against the US. Global recession dampening hardware demand or escalation in Asia-Pacific geopolitics.

"Reports... suggesting that the prime minister there has voiced apprehension about further rate hikes... I didn't really buy into this... narrative that Japan was going to be fiscally responsible." The bull case for the Yen relied on fiscal discipline and BOJ rate hikes. With bond issuance ramping up (fiscal looseness) and political pressure stopping rate hikes, the fundamental support for the Yen is gone. This clears the path for the Dollar to rip higher against the Yen. Long USD/JPY targeting 160 (currently ~156). Unexpected hawkish pivot by the BOJ or direct currency intervention by the Ministry of Finance.