Where is the tipping point for US Stocks?

Summary

• Remains positive on equities for the year due to a strong earnings trajectory extending into 2026, with technology leading but broad participation from outside the "Magnificent Seven."
• Downgraded gold to neutral; central bank demand persists, but correlations have shifted, with traditional drivers like real yields and the U.S. dollar reasserting influence.
• Increased inflation risk reinforces a cautious stance on bond yields; negative on duration overall due to a hot economy and pricing out of central bank cuts.
• Pausing rotation into cyclical/value stocks as higher bond yields, inflation, bond volatility, and reduced rate cut expectations create a "toxic mix" for these areas.
• Identifies a key threshold: U.S. 10-year yield breaking above 4.5% would be a tipping point for equities, though currently expected to hold.
• Shifted focus away from China; favors Asia tech markets, specifically Korea and Taiwan, for their resilience in the memory and semiconductor cycle.
• Upgraded view on the U.S. dollar, especially versus the euro, citing U.S. energy independence but noting an embedded political risk premium.
• Long Asia tech (Korea, Taiwan) since mid-last year, positioning agnostic to the U.S. AI sector battle between winners and losers.
• Advises that geopolitical shocks are typically short-lived compared to economic shocks; investors should focus on fundamentals amidst uncertainty.