Asks if rotation is happening in equity markets given small caps up and large cap tech flat/down year-to-date.
speaker1
Ohsung Kwon
Yes, rotation will continue for the foreseeable future due to fiscal tailwinds for the first time in three years and a changing reaction function in equity markets.
Asks to connect dots between higher interest rates and mega-cap tech (NVIDIA) outperforming.
speaker1
Ohsung Kwon
That relationship is now changing because hyperscalers are issuing significant debt, making them more interest rate sensitive.
Asks if mega-caps with high debt are becoming de facto bond market plays, super interest-rate sensitive.
speaker1
Ohsung Kwon
They are becoming more interest rate sensitive, and their rising duration risk is driving the change in market reaction function.
Asks if rates need to be lower, or can just stay steady, for small caps to benefit.
speaker1
Ohsung Kwon
Steady rates work. Small caps need speculation and a good manufacturing cycle, and we are on the cusp of a potential manufacturing upcycle for the first time in three years.
Asks what the manufacturing upcycle means beyond just buying the Russell 2000.
speaker1
Ohsung Kwon
Still likes Russell 2000 and the commodity side - energy and materials (double-upgraded from underweight to overweight in November).
Expresses concern that silver has gone from 30 to 93 in a year, asking if it's getting crazy.
speaker1
Ohsung Kwon
We are going through a huge currency debasement cycle that is likely to continue.
Asks about Japanese stock markets at record highs - should one keep buying?
speaker1
Ohsung Kwon
Part of that is also driven by the debasement cycle.