S&P 500 Erases Year’s Gains, Asia Prospers: 3-Minute MLIV

Speakers

Paul — Host (Bloomberg)

Guest Analyst — Market Strategist

Summary

The S&P 500 has erased its year-to-date gains, signaling a potential "trade scare" and rotation out of US equities.
Global divergence is widening: While the US falters, Asian markets (Japan, Taiwan, Korea) are up over 10% and Latin America is up 20%.
A structural shift is occurring where labor-intensive business models are being sold off in favor of AI-enabled scalability and logistics; "installing datacentres" is cited as a high-growth area.
Markets are highly vulnerable to the upcoming CPI print; high inflation would invalidate the priced-in Fed rate cuts, posing a dual threat to bonds and stocks.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
JAPANESE EQUITIES / NIKKEI INDEX /JAPANESE EQUITIES /TSM /KOREA /MEMORY CHIPS	LONG	—	The US market has underperformed and turned negative for the year, whereas Asian markets are up over 10%. The speaker notes Asia is "at the top of the supply chain" for infrastructure, equipment, and chips (specifically TSMC, Korean memory makers, and Japanese firms). Capital is rotating from US software/tech into Asian hardware/semiconductors because these regions control the physical constraints of the AI boom (chips/memory) and are offering better relative performance than the S&P 500. LONG Asian hardware and indices as the "rest of the world" trade outperforms the US. A global recession dampening demand for semiconductors or geopolitical tensions in the Taiwan Strait.	2:01
INTERNATIONAL EQUITIES /EMERGING MARKETS	LONG	—	"Over in Latin America, the market's up 20% this year." The narrative isn't just "Asia is good," but rather "US is bad relative to the world." Investors are seeking returns in emerging markets (LatAm) which are significantly outperforming US indices. LONG Emerging Markets (specifically Latin America) to capture the rotation away from the US dollar and US equities. Currency volatility in emerging markets or a strengthening US Dollar (DXY).	—
AI SECTOR /DATA CENTER INFRASTRUCTURE	LONG	—	The speaker notes that companies with "high human kind of work hours, labour intensive" models are under pressure ("paranoia is category five"). Conversely, those "installing datacentres" will be "minted for the next few years." The market is bifurcating based on labor efficiency. Capital is fleeing labor-heavy legacy businesses and flowing into AI scalability and the physical infrastructure (data centers) required to run it. LONG Data Center Infrastructure and AI scalability plays; SHORT/AVOID labor-intensive service sectors. Overbuilding of data center capacity or regulatory crackdowns on AI job displacement.	—
US TREASURIES /S&P 500	WATCH	—	Fed pricing has been "wobbling," and payrolls were confusing. The speaker warns that if we get high inflation (CPI) on top of this, it will be difficult to convince the FOMC to cut rates. The current valuation of the S&P 500 and US Bonds is predicated on rate cuts occurring this year. A hot CPI print removes the liquidity support, causing a repricing event in both equities and fixed income. WATCH/AVOID US broad indices and Treasuries until the inflation trajectory is clear; a high print is bearish for both. Inflation cools faster than expected, sparking a rally in US assets (reversal of the current fear).	—