Markets are dealing with a boom and a shock at the same time, says CIO Group's Steven Wieting
Speakers
Steven Wieting
— Senior Analyst, Bloomberg Intelligence
Summary
Steven Wieting discusses the market's simultaneous boom in AI spending and shock from oil supply constraints. He highlights semiconductor earnings growth as insulated from the economy, while warning that oil prices are rising due to straits closures. He becomes more cautious on energy and sees resolution as key for cyclical recovery.
- AI CapEx plans are funded and independent of economic cycles, supporting semiconductor earnings growth.
- Oil prices have risen $15 on year-end delivery due to Straits of Hormuz supply shock.
- Binding constraints on transportation and storage may persist if straits stay closed.
- European and Asian cyclical companies could benefit when the supply route reopens.
- Labor market and consumer sentiment remain unsatisfactory according to surveys.
- The Fed's ability to control inflation amid supply shocks is questioned.
Trade Ideas
Semiconductor EPS driven by AI CapEx independence.
The AI trade, encompassing hardware and software, is not dependent on the cyclical performance of the economy because CapEx plans are already funded. This independence, combined with an expected 88% gain in US semiconductor EPS this year, makes the semiconductor sector a strong outperformer regardless of broader economic weakness.
Oil prices elevated by straits supply shock.
Oil prices have moved $15 higher for delivery at year-end due to the supply shock from the Straits of Hormuz closures, creating binding constraints on transportation and storage. The longer the straits remain shut, the greater the upward pressure on oil, making this a key risk to monitor for potential further price increases until the supply route reopens.
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This CNBC video, published April 28, 2026, features Steven Wieting discussing SMH, WTI. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Steven Wieting · Tickers: SMH, WTI