While 42 Macro continues to believe the current AI investment boom exhibits the characteristics of a bubble, history suggests investors should not attempt to time its end. Instead, our systematic KISS and Dr. Mo positioning models remain the appropriate guide for determining when risk should be reduced.
At the same time, Q2 earnings season presents a growing risk of a transitory “sell-the-news” correction as elevated AI expectations collide with the potential for downward revisions to AI capex forecasts.
On the Federal Reserve, although our new multi-factor Fed Decision Tree Model continues to indicate policymakers should remain on hold over the next year, the FOMC may still choose to “play-action pass” by tightening cyclically in order to create the credibility needed for significantly easier monetary policy in 2027 and 2028.
If you are not confident your portfolio is positioned correctly for the evolving macro landscape, partner with 42 Macro for data-driven insights and proven risk management overlays—KISS and Dr. Mo—to help you stay on the right side of market risk.
— Team 42
