'DUSA' Surpasses $1B In Assets, ETF Managers Tapping in Prediction Markets | ETF IQ 2/23/2026
Speakers
Chris Davis — Chairman, Davis Advisors & Portfolio Manager
— Chopping Block co-host
Summary
- The "New Mag 7" Thesis: Chris Davis argues that large-cap Financials are the new "Blue Chips" and potentially the next "Mag 7." The sector has survived a 15-year stress test (GFC, Covid, Rates, CRE) and now trades at massive discounts (12-14x earnings) despite high capital levels and AI adaptability.
- Japan's Resurgence: A consensus is forming around Japan (EWJ) driven by a new Prime Minister and renewed flows, reminiscent of the 2012 "Abe Economics" rally. However, the panel stresses active management over indexing to avoid "zombie" nationalized telcos and banks.
- Stablecoin Institutionalization: The "Genius Act" (passed in 2025) has forced stablecoin issuers to hold specific reserves. ProShares launched IQMM to capture this $17B+ flow, signaling the formal merger of traditional money markets and crypto infrastructure.
- Active Fixed Income: With yields above 15-year medians and volatility returning, passive bond indexing is described as a "blunt instrument." Flows are aggressively shifting to active strategies (40% of fixed income ETF flows) to manage credit and duration risk dynamically.
Trade Ideas
The "Genius Act" requires stablecoin issuers to hold specific reserves (90-day treasuries). ProShares launched IQMM specifically to meet these regulatory requirements, attracting $17M in days. This is an infrastructure play on the maturation of crypto. By creating a product that legally satisfies stablecoin reserve requirements with same-day settlement, IQMM becomes a plumbing essential for the crypto ecosystem, regardless of Bitcoin's daily price action. LONG. IQMM is a low-risk yield play; BITO remains a diversifier with low correlation to Nasdaq. Regulatory repeal of the Genius Act; stablecoin market collapse.
Japan is seeing renewed inflows and political momentum under a new Prime Minister. The Yen has weakened (currency wars), historically a trigger for Japanese equity rallies (similar to 2012). While the index (Nikkei) is near highs, the "value compression" has been massive. The opportunity is not in the broad index (which holds dead-weight nationalized companies) but in active selection of manufacturing and global exporters benefiting from the weak Yen. LONG. Japan is "having a moment" with structural reform and currency tailwinds aligning. Global trade war/tariffs (Trump mentioned 15% tariffs) hurting Japanese exporters.
Financials are trading at historic value gaps (12-14x earnings vs. Value Index at 20x). Capital One (COF) specifically is trading at 12x earnings and is a top holder of AI patents. The market still views banks through the lens of the 2008 crisis, ignoring 15 years of de-risking and capital buildup. As AI reduces cost structures (banks are massive beneficiaries of AI efficiency), these multiples will re-rate higher. COF is highlighted as the "greatest fintech" disguised as a bank. LONG. Financials offer the best risk/reward in the current market, combining deep value with AI-driven margin expansion. Severe recession causing a spike in credit defaults; regulatory crackdown on AI in finance.
Space ETFs are seeing inflows as investors look for diversification beyond the US. Trump administration is releasing documents on UAPs (UFOS), keeping the sector in the news cycle. Space is no longer just a "curiosity" or sci-fi play; it is now "attached at the hip" to the Defense sector. As geopolitical tensions rise, space infrastructure becomes critical defense spending, making these ETFs a high-beta defense play rather than just a tech speculation play. LONG. Space is a proxy for next-gen defense spending. High volatility; "risk-off" market sentiment crushing high-beta growth names.
A new research report highlights "Left Tail Risks" of AI making the economy "weird." Anthropic introduced a new security feature that may displace legacy cybersecurity tools. "Second-order thinking" on AI is shifting from "who builds it" to "who does it replace." CrowdStrike (CRWD) faces direct competition from AI-native security features. AXP and DASH are tumbling on fears of AI disrupting their business models or increasing fraud/operational risks. AVOID. Sentiment is shifting against legacy tech and service models vulnerable to AI displacement. Market overreaction to AI FUD (Fear, Uncertainty, Doubt).
President Trump stated he will increase the global tariff to 15% (up from 10%) following a Supreme Court ruling. These companies are heavily reliant on global supply chains and imports. A blanket 15% tariff directly compresses margins or forces price hikes that kill demand in a soft consumer environment. SHORT. Immediate margin compression catalyst. Tariffs are walked back or companies successfully pass costs to consumers.
Bond yields are above 15-year medians, but market volatility is increasing. 40% of fixed income flows are moving to Active ETFs. Passive bond investing is a "blunt instrument" in a volatile rate environment. Active managers can navigate credit spreads and duration shifts (anticipating two rate cuts this year) better than rigid indexes. LONG. Capture high yields while using active management to mitigate volatility risks. Inflation resurgence forcing the Fed to hold or raise rates.
Up Next
This Bloomberg Markets video, published February 23, 2026, features Simeon Hyman, Eric Balchunas, Chris Davis, Cinthia Murphy, Travis Spence discussing IQMM, BITO, EWJ, DXJ, COF, WFC, JPM, DUSA, UFO, ARKX, CRWD, AXP, DASH, GPS, NKE, AEO, JCPB, JPIE. 7 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Simeon Hyman, Eric Balchunas, Chris Davis, Cinthia Murphy, Travis Spence · Tickers: IQMM, BITO, EWJ, DXJ, COF, WFC, JPM, DUSA, UFO, ARKX, CRWD, AXP, DASH, GPS, NKE, AEO, JCPB, JPIE