Stay With AI Theme to Counter Volatility, Says Evercore’s Emanuel

Market Volatility and Valuation - Market valuations are high and volatility is low, which is unsustainable, especially heading into August and September [2] - Investors are discounting the potential impact of tariffs because they haven't seen the effects in the data yet [5] - A period of dislocation and increased volatility may be approaching [1] Tariff Impact and Trade - Over 40% of US imports are still subject to open questions regarding tariffs, including those from China, Canada, and Mexico [4] - The impact of tariffs is largely being shrugged off until it appears in the data [3] - Lower-than-expected tariff collections are fading away as exemptions and goods on the water decrease [7] Economic Outlook - Economic team believes moderate growth and firm inflation will persist for the next several quarters [5] - The expectation is that economic data will turn, potentially in September or October [7] Investment Strategy - Staying with current themes that are working is advisable [2] - Owning some protection is wise, especially considering the outperformance of certain names [3]