Positioning has cleaned up significantly; short-term hedging demand is higher, and systematic strategies have reduced exposure. This should constrain downside from positive AI news.

Big rotations out of high-beta stocks seldom affect overall index levels or other asset classes. They have poor signaling value for forward returns.

Current market action is idiosyncratic and name-specific, not a broad sector or index story. Prefers US retail, homebuilders, regional banks, transport—early cyclicals exposed to lower end of K-shaped economy.

The K-shaped economy narrative is overblown. Data shows the 18-39 age cohort has seen the biggest net wealth gains since COVID.

The move lower in Treasury yields is comforting; we are a good 30 bps away from the danger zone. A move from 4.10% to 4.30% or from more than two cuts expected to slightly less doesn't change the big picture.

Valuations are significant. Amazon trades at less than half the PE of Walmart. Mag7 trades at 26x earnings, Russell at almost 25x but with half its companies on negative EPS.