Stocks Were Due for a 'Breather,' Gabelli's Belton Says

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00:00The funds that you manage, John, have had a pretty phenomenal year, largely because of that tech and

00:04AI trade. With what we're seeing today, and I know this is just one day, John, does it give you any

00:10concern that maybe that trade might be off? Well, I mean, first I'd start by saying thanks for

00:16having me. And I think we were probably overdue for a day like this. The market's been, U.S.

00:22stocks have been so strong, so consistently for several months now. I think we had 25 record

00:28closes in the S&P 500 in the third quarter alone. You know, that's the first time that's

00:35happened in more than 25 years. We've had an almost 40% move off the April lows. So I think

00:41market's due for a breather. In terms of, you know, looking forward, what does the news flow

00:47from today mean? I think we do have an economy that still has some fragile fundamentals. I think

00:54this big market move over the last several weeks has been on kind of improving soft data. And

00:59something like what's happened today does have the potential to derail some of that momentum in the

01:04soft data. So we'll see. But I'm not too concerned yet. It's just one day and we've had such a strong

01:09run to this point. Well, I do want to talk about the strength or at least what underpinned that

01:13strength in that run. And we talk about all of the business spending, the CapEx spending on AI

01:18infrastructure and associated infrastructure. That has been not only the big driver of the market,

01:23but based on what economists are telling us, that's been the primary driver of GDP for the

01:28last couple of quarters. And I understand why that's a good thing in the short term. But do you

01:33worry at all that we have not really found a way to broaden out that trade in some form or fashion?

01:38Well, I would argue that the stock market, just first before getting to the AI question,

01:43the stock market did have a big broadening out in the third quarter. I don't think a single Mag 7

01:50stock is a top 50 S&P 500 stock year to date. The Russell 2000 reached an all time high for the

01:58first time in several years during the third quarter. So you did have a broadening out in

02:03stock market performance in terms of, yeah, the AI CapEx and that dynamic. And I think I read an

02:11estimate that AI CapEx drove more than half of US GDP in the first half of the year, which is kind

02:18of incredible. And it's kind of a complicated and long discussion in terms of how risky is this?

02:27Are we in a bubble? All that. My sense is, first of all, this cycle is going to continue for better

02:35for worse for the next few quarters at least. I do think that some of the big spenders on AI

02:41infrastructure are already generating really attractive returns on that spend. There is some

02:46spend, especially that by the likes of OpenAI, that's kind of going way ahead of revenue. I think

02:52we're going to have to watch that. But for now, I think valuations seem reasonable. Fundamentals are

02:57still strong, still think some of these stocks are decent places to be.