John Mowrey on Market Volatility, Valuations, and Investing in China

Market Volatility and Valuations

• ⚠️ Despite looking oversold in the near-term, markets are ripe for further volatility due to tight financial conditions and high valuations, particularly in large-cap growth.
• 📈 Valuations in large-cap growth are higher than in 2018 (which saw a 25% drawdown) and comparable to pre-sell-off levels in 2022 (which saw a 35% drawdown).

Semiconductor and Tech Sell-Off

• 📉 The semiconductor index (SOX) peaked in July of the previous year and has been struggling, down on a one-year basis.
• 💡 While tech has struggled, other areas like REITs have shown strength, with some names up 10-12% year-to-date.

China Equities and Global GDP

• 🌏 Investors should consider overseas markets, particularly China, which has performed well this year with very low valuations.
• 📈 Companies like Alibaba are up significantly year-to-date and trading at attractive multiples, offering exposure to AI themes at a lower cost.
• 🤝 Despite potential trade tensions, it's in the best interest of global prosperity for the US and China, the two largest economies, to find agreements.

Nvidia and Future Demand

• 📊 Nvidia shows exceptional earnings growth but continues to experience multiple contraction, signaling investor concern about the sustainability of future earnings growth.
• 🔍 The market is closely watching for signals from Nvidia's developers meeting regarding future demand from hyperscalers.