Agati: Purple haze of fiscal policy uncertainty is fully back in effect

Market Outlook & Fed Policy - The market's focus should be on clarity regarding fiscal policy uncertainty rather than solely on Fed rate cuts [3] - The bond market signals concerns about deficits and debt levels, potentially limiting policy room for market advancement [5] - Despite markets near all-time highs, investors are seeking opportunities to deploy capital [7] Investment Strategy & Sector Performance - The firm is using the correction and rally to reposition portfolios, not to de-risk or build cash positions, anticipating better-than-expected Q2 earnings [10] - The firm favors quality-oriented technicals over deep value stories, expecting strong results from financials, industrials, and perennial tech [11] - An alternative perspective suggests taking profits on industrials and fading the rally on small caps [9] Economic Indicators - The dollar experienced its worst first half of the year in approximately 50 years [4] - While a steepening yield curve historically indicates positive growth, current dynamics suggest a more bearish outlook related to deficits and debt [6][7] - The 30-year bond is near a 15-year high [4]