Momentum trade investors are being warned that growing inflation risks could lead to sharp profit-and-loss swings even after a significant market reset. JPMorgan strategists note that hedge funds have largely completed their deleveraging in the semiconductor space, with elevated short interest in tech stocks and ETFs like SMH and DRAM suggesting low net exposure. Meanwhile, Societe Generale strategists point to a second wave of US tariffs, an accelerating AI and infrastructure capex cycle, renewed oil-price volatility, and large fiscal deficits as factors pointing to a more inflationary backdrop than markets currently discount. US stock valuations have dropped drastically against the rest of the world, with their premium dwindling to about 22%, the lowest in more than six years. RBC Capital Markets strategist Lori Calvasina warns that a transition at the helm of the Federal Reserve can be tough for stocks, expecting a choppy path even if the S&P 500 ends the year higher.
Amazon.com Inc
Microsoft Corporation
Goldman Sachs Group Inc
Royal Bank of Canada
JPMorgan Chase & Co