Seth Basham on Market Confusion, AI Leaders, and Rate Sensitive Sectors

Market Confusion and Tariffs

• ❓ The market is currently experiencing confusion due to recent tariff headlines, particularly the significant Canada tariff.
• ⚠️ Despite a recent rally, negative indicators like shifting momentum names and lower trading volumes suggest underlying market turmoil.
• 📈 The VIX remains at low levels despite high uncertainty, indicating investors are grappling with the potential impact of tariffs.

Microsoft as an AI Leader

• 🚀 Microsoft is identified as a key name to own in the AI revolution due to its strong position in the enterprise market.
• ☁️ With nearly all companies using Microsoft's services, their enterprise cloud is a significant advantage, with a high likelihood of clients leveraging AI.
• 💡 Microsoft is well-positioned to capture market share as companies convert to the cloud and adopt AI technologies.

Sector Opportunities

• 💡 Beyond big tech, homebuilders and REITs are seen as attractive sectors due to the expectation of falling long-term interest rates.
• 📉 This is a contrarian call, as lower rates are expected to benefit rate-sensitive sectors.

Global Market Outlook

• 🇺🇸 The US market is expected to remain the most attractive globally, with growth likely to re-accelerate in the fourth quarter and into 2026.
• 📉 A slowdown in worldwide growth and a less pronounced decline in the dollar will contribute to the US prevailing.
• 🚗 Cyclical sectors in the US may also become more attractive as growth accelerates.