Threat of a Fed Rate Hike Is Changing the Leadership in Markets, Slimmon Says

Summary

Andrew Slimmon argues that the threat of Fed rate hikes is rotating equity leadership away from speculative stocks toward stable mega-cap tech and financials. He expects earnings, not P/E expansion, to push the stock market higher into year-end. He is also constructive on AI/memory semiconductor stocks, seeing valuations as skeptical of AI spending duration, while flagging the fall election as a near-term overhang for data center buildout.

• Fed Chair Warsh reiterated a less communicative Fed stance, which Slimmon views as consistent.
• Slimmon sees rate-hike threats pressuring speculative stocks and favoring stable mega-cap tech and financials.
• He expects no P/E expansion but says strong earnings can carry equities higher by year-end.
• AI/memory chip valuations look too pessimistic about the duration of AI spending, in his view.
• He flags the upcoming fall election as a potential stall risk for data center buildout.