The Pulse of the Market

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The Pulse of the Market

Executive Summary / Lead Essay

From Rotation To Derisking

In A Nutshell

In Pulse, we tackle hot topics and other updates to the indicators we track regularly. The big things you need to know: First, lingering concerns about interest rates and the Fed flared up on Friday after a surprisingly strong

NFP report. We run through our thoughts on why this hit both the Nasdaq and the Russell 2000 so hard and note that risk of a tier 1 / garden variety pullback (5-10% from peak) has escalated in the near term. Second, other

things that jump out include the recent drop in bitcoin, which supports the idea that risks of a tier 1 pullback have risen, the sharp drop in Small Caps on Friday on interest rate fears, and takeaways from our Energy

conference.

Interest Rate Fears Pave The Path From Rotation To Derisking

Last week we spent quite a bit of time listening at various events. One of those was a macro gathering of individuals from various asset classes and backgrounds within financial markets. Some of the notable discussion

points included various debates embedded within the outlook for AI (including who will regulate it and how, potential rationalization), the awkward moment in history that private credit finds itself in today, anxiety around the

speed of the rally in stocks, and ways that the recent rise of a new class of retail investors has impacted the investing landscape. However, the issue that loomed largest across the day, to us at least, were concerns about

the interest rate environment and the path ahead for Federal Reserve policy.

Worries about rising rates and the Fed have ebbed and flowed in recent weeks. We outlined our thoughts from a US equity market perspective in our May 26th “The Pulse of the Market -- Everything in Moderation” report.