Asks Evan Brown if the strong market start to the year in the US and Asia is meaningful.
speaker1
Evan Brown
The strong start makes sense due to global fiscal spending in the US, Germany, and Japan, and inflation set to come down. It's a uniquely positive environment for risk assets.
Asks what action he is telling people to take.
speaker1
Evan Brown
Advises diversifying beyond the concentrated Mag 7 into other cyclicals, financials, industrials, and small caps, as this trade is working.
Notes financial stocks aren't cheap and many hit all-time highs.
speaker1
Evan Brown
Wouldn't fight the trend in US financials but finds cheaper opportunities in European and Japanese banks, which have room to run.
Asks about the importance of the upcoming December employment numbers.
speaker1
Evan Brown
The numbers matter. Bullish on the economy but acknowledges the unemployment rate has been steadily rising. Overweight government bonds as a hedge in case the labor market disappoints.
Asks what the main concerns or risks are that could derail the positive outlook.
speaker1
Evan Brown
Two big risks: 1) Labor market disappointment, 2) Return on Investment (ROI) on AI capital expenditure. A tech sell-off like last year's 'deep seek' moment would not be surprising.
Asks to compare the probability and impact of labor market vs. AI disappointment.
speaker1
Evan Brown
Labor market unraveling quickly is low likelihood but worth hedging against. Tech risks could unravel in several ways and are a focus.
References another guest (Kevin Cashcar) who forecasts inflation heading higher.
speaker3
Evan Brown
Expects some near-term tariff pass-through, but believes inflation is on its way lower due to shelter, wages, energy, productivity, and Chinese disinflation. Outside tariffs, inflation is basically at the 2% target.
Asks about the potential for Supreme Court action to upend tariffs and how that factors into thinking.
speaker4
Evan Brown
It would be bullish for the market if tariffs are struck down. The administration may not be in a rush to reimpose them ahead of midterms due to affordability concerns.