The Fed was well into restrictive territory. Now with inflation at ~2.4% and a softer jobs market, the Fed is recalibrating toward neutral. The Fed's long-term neutral is 2% inflation plus 1% r-star = 3%. The Fed is basically at neutral now.

The Mag 7 peaked in October and has been in a holding pattern. The market has broadened nicely into other sectors while maintaining its upward slope. About two-thirds to 70% of S&P stocks are now in uptrends. As long as the Mag 7 doesn't go into a downturn, the market can broaden without going down.

As long as big tech does not go down, the market can go up as it broadens. But I don't think we'll see the kind of returns we've seen. The S&P cap-weighted is up ~103% since the bull market began; equal-weighted is only up ~46%. The market has over-earned. I don't see a lot of upside, but modest upside will keep us at above-average rates of change historically.

Yes, for investors, that's a positive development. Since the April '25 tariff tantrum, the S&P equal-weight has almost caught up to cap-weight. Overseas, developed and emerging markets have done well after underperforming for over 10 years. With 10 stocks being 40% of the S&P cap, it's important to have a broader menu.