Portfolio watch
• The Invest With Rules blog is taking a bearish stance. “Our short-term market score has fallen to 0.8 out of 10, signaling that it is time to play defense,” it tells investors. Tech, small-caps and international equities have all “lost their short-term uptrends.” The blog has “raised significant amounts of cash” and “moved toward more defensive areas” to reduce short-term risk. Longer-term market scoring has moved down to 5 out of 10, and the blog is stressing the protection of capital until signals improve.
• Mitch Zacks at Zacks Investment Management is looking at the yield problem for companies like Anthropic, which is offering 10%-plus yields on a five-year financing with Blackstone funds. The yield means substantial financing costs, and those costs “warrant caution,” he writes. However, away from tech, opportunities abound as the S&P 500 ex-tech expects earnings growth of 14.4%, with aerospace, construction, industrials, finance and transportation having upwardly revised profit forecasts. With 14 of 16 S&P 500 sectors reporting upward revisions, the world outside of AI looks promising, he concludes.
• Over at Jackson Square Capital, Andrew Graham is taking a contrarian view. One promising development is that bond yields and energy prices have “uncoupled,” with energy rising and yields falling, the latter declining on expectations of slower growth in AI capital expenditures. The AI equity decline seems to have reached “short-term oversold territory,” and a recovery may be in the offing. But a sharp decline in the SOX semiconductor index would reinforce a bearish view, he writes.
