This market is set up for value to out-perform, says Ariel's Charlie Bobrinskoy

Market Trends & Rotation - Big tech names like Palantir, Oracle, and Coinbase are selling off, underperforming on the S&P 500 [1] - The equal weight S&P 500 ETF (RSP) is starting to outperform the MAG7 heavy S&P 500 ETF [1] - Small cap value, midcap value, and large cap value are trading around or below their historic multiples, making them potentially attractive compared to expensive large cap tech [3] - The market is heavily anticipating Fed rate cuts starting next month, but core inflation remains around 3%, a range where the Fed historically holds or increases rates 94% of the time [5][6] Investment Opportunities & Strategies - Value stocks are poised to outperform due to lower entry multiples [4] - Focus on consumer stocks in the high-end (>$100,000 income) and low-end segments, while being cautious on the mid-tier consumer ($50,000-$80,000 income) due to tariff impacts [12][13][14][15] - Home Depot and Costco are favored in the higher-end consumer segment, while Walmart is favored in the lower-end [13][14] - Housing-related names like Residio and Mohawk are attractive due to pent-up demand and low multiples [16][17] Economic Factors & Risks - Short-term bearishness on inflation is expected over the next 6-9 months due to tariffs impacting prices [10] - Longer-term optimism is driven by the potential for AI to increase productivity [10] - Interest rate cuts are important for value names, especially those sensitive to interest rates and housing-related sectors [9]