Earlier today, Muddy Waters Capital found a Carson BLOCK joined Bloomberg Television, and he offered this pretty bullish advice on the Magnificent Seven. There's a debate as to what really drives when you talk about the US market, especially the S&P 500 or the MAG seven. I'm in the camp that although I haven't, I don't have the facility with math to really try to prove this out. But I'm in the camp that believes that what drives that index are flows. And so at the end of every month, U.S., U.S. workers, you know, a lot of them, their paychecks go into their four one K's, which are retirement funds. And there is a robo bid for these stocks. And what happens is you reduce the effective supply of stock because you're taking out the active owners of stocks that will decide, hey, at this price, I'm a seller at a lower price, I'm a buyer in your replacing that with a

holder that will never sell unless and until it has outflows because people are drawing down the retirement accounts. So, according to that view, as long as the labor market is reasonably strong in the US, which it is, you're not going to see outflows, you're just going to continue to see inflows, especially in those in the most heavily weighted names in the S&P 500. So, I have in the past few years, I have looked back on my career as an activist short seller and, you know, kind of done the math and felt like, well, you know. I probably could have just been levered long. The S&P 500 deferred my taxes and got through a lot less BS and been more or less the same position financially. So, yeah, I mean, that does make the market more fragile. But there's a Fed point. There's always a Fed point, you know, is there does there come a point in time

when the system breaks and the Fed can't fix it? Theoretically, yes. In our lifetimes. I don't know. So I think for now, it probably just pays not to think too much. Just close your eyes and buy, you know, probably Mag seven. Muddy Waters Capital found a custom block there. Let's bring in another take C mazhar, chief global strategist at Principal asset management. Many that you're talking to feeling, you should just close your eyes and buy max seven still here. Well, hi, Carol. I think there is that continued demand certainly for Macs have been and I agree with a lot on what was just said, that the environment is it's almost a sweet spot for U.S. equities. You've got the Fed, you've got a generally a strong economy. There's a couple of risks out there, but there's more near-term risk, something

that we wouldn't necessarily expect them to have a sustained impact in the market. So from that perspective, yes, the U.S. dollar looks really attractive and the max seven, rather than just being a short-term play, I think a lot of people, including ourselves, are looking at that. Max seven is something which is going to deliver not just for this year, but it's more of a strategic asset allocation play that we want to continue to have exposure to those. Having said that, in a positive environment for US equities, with rates coming down and growth still fairly solid, you should see a broadening out. I think that the opportunities in other parts of the market, which maybe are not as expensive, I haven't really seen even some of that catch-up trade post-COVID. So I think there's opportunities everywhere, said he. Mike seven does deserve to continue to have that not place in a portfolio.

Senior Coulson's core idea is that the market, particularly those Max seven stocks, will be supported because retirement money is kind of on autopilot, right? It just comes in, and that supports the index level. How does that impact your job if you're really genuinely interested in the technology sector as an investor? So, I think he's right in that there is always going to be that play, you know, that continued stream into the Mike seven. Remember also that the Mike seven, because of that cash struggles, because it's considered a bit of a safety defensive play almost on the US income in the US market, that it's almost some of that like a continuous stream of where some are considered it's going to be fairly consistent throughout. And to his point, until it isn't, it will continue to attract flows. So, I think that that does come into the thesis, and we have seen that play out over the last couple of years. When things get a little bit tough, Mike

seven almost becomes a safety trade. So I think that still holds. It's just that there's probably can be other opportunities that also return. Investors should probably be considering outside of just that. Mike seven. This week starts earnings season in earnest for technology. How important is this quarter of all quarters, especially given that we have now seen the Fed move in reducing rates? So I think every quarter is going to be more important than the last in terms of whether it's going to maintain the rally going forward. So take takeoff. Evan, is you know, the eyes on the tech sector are probably increasing with each earnings season because the expectations in consideration of the fact that valuations are quite frothy, that there's always a is always going to say, are they going to continue to deliver? Can they deliver on those very lofty expectations that investors have? So we do need to see that continued delivery. But actually, I still think that like let's say we work to get a disappointing

quarter where you see a slight pullback in that performance relative to expectations, it doesn't necessarily sound the death knell. It's just probably a bit of a kind of a recalibration of expectations back to something which is a little bit more realistic. But then as we look out over a couple of quarters in years, I think investors will still believe that Mark seven, particularly with the AI narrative, have still got something to deliver. I want to go exactly there, Sema, and we turn to our great control room to bring up what's happening within video with the like of Palo Alto Networks as well, but more broadly and video, of course, the trade up to a new record highs. Seeing, though, other key cybersecurity names like Palo Alto Networks. Also on the high side today at a new record high, too. How important is the NVIDIA, the chip sector, the trade to keep on leading these sorts of gains?

They are important. I do think they're reducing in importance, though, because of, you know, this fairly strong, constructive economic backdrop that we have. But we do feel some continued enthusiasm about obviously about in video, about air generally and other sectors, other companies that can continue to benefit from it. I mean, you just have to look at chips and just say look at the ones which are related to the ones which are not air related. And you can see there's kind of bifurcation coming through the market. So there's a clear favorite with regard to that narrative. And investors are focusing on where can I play a really strong part as a first, I guess the first generation like in video. But what are the other next companies that could start to benefit from this, this new theme that is playing out in market? Simon, we love talking to you because you can go across asset, too.

And David Kostin and the team over at Goldman Sachs go cross-asset again today for us as well, because on the flip side of what Karsten BLOCK is saying, they're saying actually, look, the S&P 500 cannot keep up the rate of returns that we used to. In fact, we're only going at an annualized 3% return in the future, for example, because they can go to bonds, we can go to other assets. Are you seeing investors wanting to go? They're out of equities. So certainly from an asset allocation perspective, we do think that this is also the time to have exposure to fixed income. You know, if you want to get safety, then you should be long duration. But to get that pick-up in terms of yield income kind of play player play over the U.S., the strength of the U.S. economy, then credit is your place to be said.

I think there's a lot of opportunities out there, specifically with regards to the 3% return going forward. I think that it is true that you're not likely to see the same kind of returns that we've enjoyed for the last ten, 15 years. A lot of that narrative was driven by the fact that the Fed had and other central banks around the world had kept rates really, really low, which were not anticipating going forward. We see rate cuts, but nothing returning to that incredibly easy monetary policy of zero balance sheet expansion. So it does mean that the math is a little bit more onerous for equities, but it's still a compelling proposition. It's just that in this environment, there are opportunities across, I think across all of risk assets, and it makes sense for investors to have that diversification because it actually continues to deliver at this point.

Carson Block's Bullishness on US Equities

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Carson Block's Bullishness on US Equities

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