00:00Is it enough for global investors to gravitate more towards Chinese AI plays pull back from the Max 7?
00:07In my conversation with Ed Yadani just yesterday, he talked about underweighting the Max 7.
00:15I think it's one of the reasons that the bond yield is still above 4% in the U.S.
00:20is, you know, the debt situation, there's nothing that we're doing to improve it.
00:24It's the bond vigilantes who basically say, well, if the Fed's not going to maintain law and order in the capital markets, they're going to do it.
00:32And so far, the Fed's attempts to ease have been offset by what the bond vigilantes have been doing.
00:43Of course, Dylan, we had Ed Yadani talking about the yield situation,
00:48how they're rising compared to about just a year ago, despite the fact that the Fed is cutting rates.
00:55First off, let me just get your reaction from, you know, on the AI space.
01:00Is it time to pull back from the Max 7?
01:06Well, I think we obviously see the magnificent 7 are struggling a bit,
01:11especially for Nvidia performance over the couple of weeks or months.
01:16And I feel like we can consider something like to adjusting our position to relatively smaller names like Broadcom.
01:25I think they have a relatively competitive advantage compared with the high valuation kind of Max 7 names.
01:35I think that is obviously a strategy we can potentially consider.
01:39And when it comes to the bond market, we're seeing anxiety just by looking at 30-year yields.
01:48I think there is apprehension perhaps that, you know, yields should actually be lower given that the Fed is on an easing cycle.
01:57What's your reading on what we're seeing in the yield space?
02:01Well, I think for the February cut itself, the market has pretty much fully priced in a 25 basis point cut on Wednesday.
02:11And this move is likely to be to be framed as the risk management steps.
02:17So the real focus is in the cut itself.
02:20But it's the dot plot and also Powell's language down the road.
02:26And also, I think people are considering about a potential inflation stickiness down the road,
02:35given, you know, like Hassett, who is the potential next Fed chair, is leaning towards more of the dovish side.
02:43And if this is the case, then it will naturally boost the long end of the U.S. equities returns.
02:51And I think that potential is the most important concern that markets are looking into.
Be the first to comment