Market Overview & Outlook - The AI trade is seen as justifying the current market rally and bull market [1] - The market is considered a strong bull market with record earnings and new cycle highs in profit margins [1] - The dual tailwinds of record earnings and new cycle highs in profit margins are supporting the bull market [1] - The industry suggests remaining overweight equities with a diversified portfolio [5] - The industry favors large-cap stocks over small-cap stocks [5] August Historical Trends & Potential Risks - Historically, August has been negative in post-election years under a second-term president, with the last six occurrences being down [2] - August is associated with unexpected turbulence and random events [3][6] - A potential 4% pullback is possible but considered part of the process [6] Investment Opportunities - Cyclical areas within the US market, such as industrials, financials, and technology, are favored [5] - Opportunities exist globally [5]

Analyst's Disclosure:I/we have a beneficial long position in the shares of ALB either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any inv ...

For more, let's bring in Lisanne Saunders. She's the chief investment strategist at Charles Schwab. You know, things are changing, Lisanne, when you start to see the new monikers uh to try to group, you know, group things together for the new Nothing seems to be getting in front of this AI trade, though.Yeah. No, but but I think there's there's more discernment in terms of what does well. And you're right, the moniker do change now.I've been hearing more of the MAG 3 earlier this year instead of the MAG 7. ...

Joining us now for more on the market, Sati, the DCLA managing partner. He's also a CNBC contributor. Sarat, great to see you.Um, we're practically at record highs. Yeah. Are you finding value or are you paying up.I think if you separate the market from the AI trade, I think you can definitely find opportunity and I would say a value of areas that have not performed, whether it's because there's an administration overhang or fundamentals really haven't caught up yet. So, I do think you can deploy capital. I ...

Let's bring in Bernstein senior analyst Stacy Rasc. Stacy um you know when it comes to really I guess the marquee names the the sort of acknowledged leaders in uh the AI story Nvidia Broadcom it feels as if not much has changed over the last several months except for investors perception of how much risk there is to that story. That's exactly it.you you go back five or 6 months beginning of the year, especially around, you know, the deepseek moment. Um, people thought the AI trade was over, right. They thou ...

Market Reaction - US stock futures are set to extend gains, with S&P 500 futures up 0.7%, Nasdaq futures gaining almost 1%, and Dow Jones futures up 0.6% following a ceasefire agreement between Israel and Iran [1] - The three major US stock indexes rallied around 0.9% the previous day after Iran launched missiles at a US air base in Qatar, which resulted in no casualties [2] Oil and Commodity Prices - Oil prices plunged significantly, with WTI falling nearly 13% from $74 to $64.48 per barrel after the ceasefire announcement [3] - Gold prices fell by 1.5%, and Treasury yields dropped to their lowest levels since early May [3] Company Performance - Shares of Exxon Mobil and Chevron decreased by 1.7% and 1.4% respectively in premarket trading [4] - Defence companies in Europe, including Lockheed Martin and Northrop Grumman, saw declines of 1.4% and 0.8% respectively in pre-market trading [6] Geopolitical Impact - Reports of Iran violating the ceasefire by firing two missiles were intercepted, leading to a small rebound in oil, gold, and bond yields [5] - Market analysts noted that the rapid decline in oil prices indicates that the market is treating the ceasefire agreement as a solid deal, but further violations could reverse this trend [7] Future Market Focus - With geopolitical risks expected to moderate, the market may shift focus to Q2 earnings season and US trade tariffs in the coming weeks [7] - Attention may also turn to the AI sector and volatility trends as summer approaches [8] Individual Company Updates - Nvidia stock rose by 0.9%, while CEO Jensen Huang is set to sell up to $865 million in shares by the end of 2025 [9] - Alphabet's stock increased by 1.4% despite potential tighter regulations from the UK's competition authority [10]

Market Overview & Geopolitical Risk - Equity investors are largely comfortable ignoring geopolitical risks unless oil prices significantly increase [2] - The market recovery suggests reassurance that equity investors can overlook geopolitical risks if oil prices remain stable [2] - Geopolitical risks are primarily assessed through the channel of oil prices [3] Investment Strategy & Positioning - The firm recommends a long position in high-quality US equities due to earnings growth, high valuations, and headline risks [4][5] - A rotation from growth stocks into quality stocks is advised due to changes in the interest rate market [6] - Institutional investors had significantly recovered their positioning, though slightly less heavy than in late February [8] - Positioning is considered pretty full, close to levels seen in mid to late February, but not underweight [9] Sector Analysis - Energy sector is generally underowned and not considered a core part of quality stocks, but potential persistence of geopolitical risks may force positioning [10][12] - Large-cap banks are favored due to a seemingly good operating environment, while regional banks are considered tricky due to lack of sponsorship for lower quality trades [18] Macroeconomic Factors - A weaker dollar is a tailwind but could become a concern if it becomes too volatile, potentially signaling the end of US exceptionalism [13] - Foreign investors are hedging more of their dollar risk [15] - Strong Q1 earnings, particularly from Hyperscalers doubling down on capital expenditure, have reinforced the AI trade and attracted investors back to US equities [13][14]

Geopolitical Impact on Markets - The market initially reacted positively because the situation between Israel and Iran didn't worsen significantly over the weekend [2] - Markets generally don't react strongly to geopolitics, except for oil prices, which are closely monitored [2][3] - The market believes that as long as the US remains on the sidelines and oil prices stay relatively stable, the conflict's impact on stocks will be manageable [4] - US involvement would change the market's assessment [2][5] Market Drivers and Sentiment - The primary driver of the market is currently momentum, with a return to the momentum trade [6] - Equity markets assess geopolitical events based on their potential impact on companies' bottom lines [7] - The AI trade and mega-cap tech are currently not significantly affected by the geopolitical situation in the short term [8] Economic Concerns and Fed Policy - The economy is showing signs of a slowdown, which is a concern [11][12] - The Fed is unlikely to cut rates due to concerns about tariffs and potential higher oil prices [9][12][13] - The major risk is that the economy slows down while the Fed remains on the sidelines, potentially disrupting the momentum trade in the long run [13]