US Election Uncertainty Impacting Tech Investment Strategies

Companies face uncertainty in the US market as election outcomes and central bank policies remain unclear.

### Uncertainty in the US Election Cycle and Its Impact on Investment Strategies
* 🗳️  As the US election approaches, companies express a **growing lack of clarity regarding economic policies**, causing concern both domestically and among international partners.
* 📊  Early voting has not provided clear insights into potential economic strategies, leaving investors and companies alike **uncertain about future directions**.
* 🌏  The geopolitical tensions with China remain a bipartisan issue, with both Democratic and Republican parties adopting a **hawkish stance**, particularly regarding **electric vehicles (EVs) and technology**.
* 💻  There is currently no definitive pro-tech policy emerging from the election, and the pressure on tech investments, especially in **AI and chips**, continues to grow due to **national security concerns**.
* 🏦  Central bank policies are seen as a **more immediate focus** than the election outcome, with expectations for a **potential rate cut of 25 basis points**, signaling a **shift in market conditions**.
* 📈  Long-term investors are encouraged to consider chips as a **crucial infrastructure for AI development**, viewing current market conditions as a **potential buying opportunity**.
* 💬  Despite recent earnings reports showing strong performance, market valuations indicate a level of **pessimism**, leading to questions about the **sustainability of revenue streams** from major clients.
* 🔍  The uncertainty surrounding investment cycles and market dynamics is expected to persist, raising concerns about the **future landscape for companies and investors alike**, particularly into **2025 and 2026**.

This is a theme more companies feeling a lack of clarity from the US right now. Yes, it's a bit unusual to be this far into the election cycle with the election actually just around the corner, especially if you count voting not at the booth. Early voting did not have any clarity on the economic policies. And certainly, our partners outside of the US are nervous, just as we may be here. Let's talk about what you've been seeing domestically. There is a lack of clarity because the election has not happened, but the policy leanings that we're hearing, for example, from now the Democratic ticket. Are you feeling that companies, are you yourself as an investor, changing how you look at companies based on US wanting. Well, more geopolitical tensions with China, not less? Well, you know, China, I think, is a special topic. I don't think it's I think it's party agnostic. I think that's one topic that Washington

can agree on is being a bit hawkish toward China. And it has been this way for many years. So, you know, when companies like BYD say that they want to wait until the election is over, I wonder to myself if some of that is just the companies saying that the election itself is a bit of an uncertainty for the markets or if it truly is, it believes that there's going to be a policy difference because from where I sit, I don't think there is. Both the Democratic Party, certainly wasn't Harris at the time. It was President Biden, as well as the Trump campaign. They've both been very hawkish, especially on EVs that may be coming over from Mexico. So I think this is more noise than it is actually something that could be solidified into one party versus another being favorable to new ideas or any other companies. And you see that the China issue is bipartisan. Difficult.

But is there a clear pro-tech policy platform or pro-tech investment for AI? The outcome of this presidential election in the US? And I think that's the hard part, is that we don't know that it's the hard part. There are some policy generalities that we've heard of from either actually both parties, but there are many specifics that could make investors say, okay, this is pro-tech. If anything, I think there's increased pressure on tech with AI and certainly chips, write enabling chips. There's a lot of national security concerns. And we've seen this in the last few years that this is not anything new. And I don't think it's going to be something that's going to be new after this election is over. In markets, there is seldom just one single headwind or tailwind at any one time. There are multiple, which is the greater focus for you right now, central bank policy or November.

For us right now, it is definitely central bank policy because there's so much uncertainty, there's a lot of noise we're trying to ignore. The Fed, I think, is more on the closer docket, especially with the September rate cuts that the markets seem to be expecting. We are definitely expecting it. We've never been in the 50 basis point camp. We're still in the 25 basis point camp, but we think that could be a start of a cycle. 25 basis points isn't that big, so it's not going to make or break a company that needs to borrow. But a certainly a cycle would be a signal to the markets, and that could be the tide that lifts all boats. Tech certainly, but not just tech, but other areas of the market that have been suppressed for about 18 months now. And all boats are not rising today. In fact, they're all falling but chips the hardest.

Do you invest in AI and chips at this moment? I think that depends on your time frame. If you're a long-term investor like us, chips definitely have a place because this, I think, is not over. It is not a hype. It needs to get cleaned up over time. But if you're a long-term investor, that's the infrastructure that is at the center of how you develop A.I. So I think it can be an exciting bet. It might be a buying opportunity, but certainly for the long term. And there is anxiety in the market this morning. We're showing it on the screen, which you left from in videos, earnings with confidence. Or are you still looking for more data on how long this investment cycle has to run? It's certainly more data, but I wasn't pessimistic about it. Look, I mean, they beat, right? It was just not good enough for the

markets. That tells you more about the valuations of the markets than about the company itself. So we're not pessimistic. But at the same time, you sort of wonder, how long does this have to go? Right. And they have great market share right now. But when do the companies like Facebook and other companies that they rely on for their revenues say enough is enough? And that is the uncertainty that I think is coming down the line maybe in 2025, 2026.

Impact of Geopolitics, US Election on Tech Sector

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Bloomberg Technology

Lack of Clarity in US Economic Policies Amid Election Cycle

Companies are feeling uncertain due to the upcoming US election and the lack of clear economic policies.

Geopolitical tensions with China are causing companies to hesitate, but the hawkish stance towards China has been a bipartisan issue for years.

The election's impact on market uncertainty may be more noise than a significant policy difference between the two parties.

Uncertainty in Pro-Tech Policy and AI Investment

The outcome of the US presidential election may not provide a clear pro-tech policy platform for AI, as both parties offer generalities without specific details.

There is increased pressure on the tech industry due to national security concerns, particularly related to AI and enabling chips.

The current focus for investors is on central bank policy, with expectations of a 25 basis point rate cut in September, which could signal the start of a cycle and potentially lift suppressed areas of the market.

Investing in AI and Chips: A Long-Term Perspective

Investing in chips is seen as a valuable long-term opportunity for developing AI infrastructure.

The current market anxiety and mixed earnings reports from companies like Nvidia highlight the need for more data on the investment cycle.

While there is uncertainty, the overall sentiment remains optimistic about the potential of AI and chip investments.

Market valuations are more indicative of the overall market than the individual company.

There is uncertainty about how long the current market share dominance will last.

The potential for major revenue-generating companies, like Facebook, to pull back is a looming concern for the future.