The tech sector has dominated the stock market in the first half of 2024, and arguably, for many years on the stock market. Major players like Nvidia continue to outperform and spill over into other sectors that require or utilize their tech. The gains in the market have narrowed in on this sector in recent months, but can that change?to give insight into the domination of the tech sector, the idea of rotation in the market, and risk appetite in the Treasury Bond market.
We have mild consolidation and then after the election, when there's a lot more clarity, usually, uh that's a very bullish time for stock indices.I think, uh you know, it's interesting, we've seen a 50 basis point drop in yields, but, you know, small caps still really haven't done all that well and slowly but surely you're seeing evidence of financials and industrials and discretionary health care start to show a little bit of strength.
But so even right now with tech still dominating, you know, a good rule of thumb is to diversify your portfolio, especially for people who are just kind of passively investing.Well, I guess the question is why would you want to diversify the portfolio if everything is being led by tech and it's working?But in this case, that's gonna mean investing in things that aren't working.So put all your eggs in one basket and and watch it like a hawk.
Um So, uh you know, to, to your point earlier, a lot of different ways to measure relative strength that most investors think of RSI relative strength index, which largely just measures the strength of a, a stock against its own prior history, similar to throwing a baseball up and gradually seeing it drop.
So, I, I'm almost always of the school that you buy high, sell higher, uh, sell low or avoid low and cover lower versus thinking that um you know, you're gonna be able to buy something, it's at its lows just because of valuation purposes and you've ended up timing it correctly.
So to answer your question, sometimes when the horse gets out of the barn, you have to go chase it because it might not come back. Uh The re sector utilities, utilities have strengthened, um a lot of that strength was just due to A I and Power Centers. You can't say that based on three days of decline in NVIDIA where it loses 300 billion and then it goes for three days of declining NVIDIA that, that the world could be falling by that it could.This episode being brought to you by the number of 4.5% in that is the level on the 10 year yield that it is surging towards today.And this gives us a chance to talk about the fed um Mark uh Mark, let me ask you long term, you're expecting lower yields on the tenure, I believe.
And the labor market, we're seeing, you know, increasingly more layoffs, not mass unemployment, but in general, some, as I say, weakness on the fringe, it's caused rates to start to really roll over pretty sharply over the last few months. We're not gonna hike rates and, and, and that wasn't really taken into account on the last dot plot after the last fed meeting, I think he's gonna use this uh specifically as a time to address that.And, and most traders are anticipating a September rate cut is one rate cut, a 25 basis point cut going to make a big difference to investors.
Well, look, I think a lot of investors grew up thinking that uh fundamentals and, or fed policy largely drive the stock market.I think that a lot of that is cycles and sentiment that cause the larger turns.Uh you know, the market seems to embrace, um you know, a lot of those, a lot of those things that it can be helpful.Well, we'd love to talk about the fed, but we are gonna move on to uh our last segment of the day who wore it better.
Um you know, being able to, uh you know, borrow, you know, borrow and lend it at different areas of the curve that obviously would favor rates being a little bit higher than lower for financial strength. So, you know, the the thinking was that all these banks are making big bonuses and there was real concern.
So, you know, a number of different hedge funds, um, based on the direction of Preet Bharara, uh actually were, were rated at the time, mine myself level, Global diamondback, which was formed from a few people used to work with S AC uh Steve Cohen's firm that now is 0.72.And, and, uh, yeah, it was an interesting time.Of course, they ended up not being able to prove anything.
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