Navigating Market Volatility: Weekly Video Update with Wei Li – Market Take

In this week’s Market take, we are witnessing some powerful rotations in the markets, particularly in small cap stocks. This rotation has been driven by recent macro trends, such as the surprise downside in CPI data, which has reignited excitement for potential rate cuts.

Despite the near-term uncertainty in macro trends, it is important to focus on the fundamentals and earnings prospects when deploying risk in equities. Tech stocks are still expected to deliver strong earnings growth, with tech companies projected to see an 18% increase in earnings year on year.

However, near-term volatility is likely as we approach key events like Nvidia’s earnings report at the end of August. This could lead to some steam being let out of the market, especially with concerns around tech capex and summer thin liquidity.

Overall, it is important to lean into the dislocations created by these market rotations as we re-evaluate our conviction in the fundamental picture. Stay cautious on macro trends, focus on fundamentals, and be prepared for some near-term volatility in the markets.