Melissa Lee (Host) 00:00.350
so at the end of a week of wild swings what have we learned about this trade or is this just sort of a blip in the bigger AI trade tim what do you think
Tim Seymour (Founder and Chief Investment Officer) 00:09.110
no i look i think the last month has been important in terms of evaluating free cash flow from companies that that were gold standard by looking at the debt markets by assessing the dynamics of does oracle have funding are the the blue owls of the world sticking by there's other
Tim Seymour (Founder and Chief Investment Officer) 00:22.790
folks that are you know that's emblematic of a broader story i do think that hardware in the case of micron they told us that they were actually seeing spot prices that which they could price out two three four quarters that kind of visibility the fact that you saw a rebound on
Tim Seymour (Founder and Chief Investment Officer) 00:39.990
a day when you had a triple witching i know steve watches this stuff too i mean you had enormous volume you had i'd say some incentive for where dealers were positioning to be on the right side of the upside today and i do think that was part of today's move but if you're if
Tim Seymour (Founder and Chief Investment Officer) 00:54.710
you're watching kind of the short term between now and yes dare we use the santa claus rally dynamic i i think it feels pretty good i love this bounce off the fifty day nothing to me has changed in terms of the fundamentals and the key fundamentals are that demand is there the
Tim Seymour (Founder and Chief Investment Officer) 01:09.710
fed is your friend and you continue to see investors pouring money into US equities US fund flows have been great this week
Melissa Lee (Host) 01:15.710
yeah mike what was the role of today's huge expiry seven point one trillion in notional and the impact here i mean it's you think that friday would be quiet because it's the the friday before holiday short and trading week and yet it was very heavy
Mike Khouw (Chief Strategist) 01:28.310
yeah well i i think you're right that normally when you're just taking a look at a at a pre holiday weekend you're going to see reduced trading volumes but when you have an expiration like a triple or a quad which you have a lot of expiring contracts and that often means that
Mike Khouw (Chief Strategist) 01:44.030
you've got positions that need to be rolled to subsequent expirations and so that tends to fuel a big uptick in volume we certainly did see that today but i think the positive i took away from today's activity was the fact that the volatility indices both on nasdaq and on the S
Mike Khouw (Chief Strategist) 01:59.350
and P came in pretty considerably and it was something i was looking at earlier this week that had been troubling me i think it's looking a little bit better right now steve i
Melissa Lee (Host) 02:08.870
think
Steve Grasso (CEO) 02:09.190
when you look at this you have oracle that everyone was worried about the debt issues then you had sort of a reset all the bloated names the quantum names AI names and everyone wanted a reason to spend again or not spend but to invest again so you have the end of the year you
Steve Grasso (CEO) 02:24.550
have the santa claus rally coming on you had to get that fluff out of the market so i think the the fluff came out of the market and i think it came out of the market enough so that people can get back to investing so if they're back to investing they're going to buy what they
Steve Grasso (CEO) 02:38.750
know again because if you look at energy energy is not a bigger enough percentage to move the overall market industrial is not a big enough percentage tech is forty percent of the overall market so if you're expecting the market go to go up it's not going up without technology
Steve Grasso (CEO) 02:52.190
so people going to go with what the most widely held held names are and what they feel comfortable buying with a pullback right
Melissa Lee (Host) 03:01.070
but within that trade i mean it's it's a huge group of stocks here we did see distinctly today hardware names do in particular semiconductors was microns guidance enough to make you think maybe the safer quote unquote safer area within the AI trade would be the areas the
Melissa Lee (Host) 03:16.990
companies that have visibility for the next two years i mean the
Courtney Garcia (Senior Wealth Advisor) 03:20.750
guidance that micron gave was phenomenal in terms of how much demand there is for the next two years
Courtney Garcia (Senior Wealth Advisor) 03:27.550
correct and and the demand is a huge part of that but other also they're in a really good position to be able to pay down their debt when you look at their cash flow and i think that's a big part of this because i don't think the AI trade is over by any means but people are
Courtney Garcia (Senior Wealth Advisor) 03:39.110
really starting to question the companies who don't have the cash flow to support all of this build out that's going on so i think that's we're going to see this bifurcation happening in twenty twenty six is the companies who have the cash flow to support it and those who don't
Courtney Garcia (Senior Wealth Advisor) 03:51.950
because i think investors are becoming increasingly wary about that and you bring up a good point i mean when you look at tech and information services that's over forty five percent of the SP five hundred now there's a lot of concentration risk and i think a lot of people are
Courtney Garcia (Senior Wealth Advisor) 04:03.510
really waking up to that and realizing that so i think you want to start to look elsewhere i don't think this trades going where but is it going to have the kind of outperformance it did in twenty twenty five i don't know