Gareth Soloway argues this is a late-stage bull market with narrowing leadership, strong mega-cap AI capex, and rising inflation pressure. He is tactically short the S&P and Bitcoin, cautious on gold near term, but still bullish on gold over a multi-year horizon.
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This interview frames the current market as a bull market in the indexes but not in the broad market. Gareth Soloway says leadership is concentrated in a few mega-cap, AI-related names while many subsectors, like software, are already weak, which he interprets as characteristic of a late-stage bull market similar to the dot-com era. He points to massive AI capex from large technology companies as a major driver of the economy and stock market, arguing that this spending has helped delay recession even as other parts of the economy are under strain. On macro, Soloway says the market is currently focused on two things: resilient US earnings and the US economy, which he believes are strong enough to outweigh concerns like higher oil prices for now. …
Near term, this is a resistance-and-failure setup: if the S&P and Nasdaq cannot hold above the recent breakout zone for a week, the rally is vulnerable to a sharp pullback. Soloway is leaning short tactically and sees Bitcoin and gold as vulnerable to near-term weakness as well.
Over the next few weeks to months, the market likely stays supported only if mega-cap earnings and AI spending keep surprising enough to offset the damage from higher oil and weaker breadth. A failed breakout would shift the story from ‘healthy bull market’ to ‘late-cycle top’ much faster.
Structurally, Soloway thinks the regime is still inflation-prone and late-cycle, with AI capex and fiscal excess acting as temporary supports rather than permanent cures. The durable thesis is that broader weakness may be masked until the narrow leadership finally rolls over.
This is a late-stage bull market rather than a broad, healthy bull market.
He says indexes are making highs, but leadership is narrow and many stocks/sector laggards remain weak.
Massive AI capex by mega-cap companies is acting like stimulus for the economy and is helping delay recession.
He repeatedly says big-tech spending of $100B-$200B per firm supports the economy and stock market.
High oil prices have not yet broken equities because strong earnings and U.S. economic resilience still matter most to investors.
He says the market ignores geopolitical and oil shocks until earnings and economy weaken.
As a trader, do you look at this as a bull market because the entire index is up and at new all-time highs, or do you see it as a market of stocks where certain subsectors are already falling?
Gareth says it is a bull market but a late stage bull market, similar to 2000 when only certain sectors drove the upside while many stocks lagged. He cautions that when those leader stocks finally come in, the whole market can top, and notes we've just crossed 25,000 on the NASDAQ similarly to how it pierced 5,000 before the 2000 top.
What are the biggest drivers of the stock market right now? Is it still Iran? Oil? The FOMC? Earnings season?
Gareth says there are two drivers and most people have gotten the Iran situation wrong. He explains that as long as the US economy is hanging in there and earnings are strong, that's all the market cares about. High oil prices will ultimately cause issues but until that shows up in the data, investors keep their blinders on.
How would you rank consumer strength right now?
Gareth describes a K-shaped recovery where 70% of the US (especially the lower 50%) feels like they're in a recession, while those with assets in the stock market are excited and spending. The capex spending from mega caps on AI plus high-end consumer spending is keeping the engine running, but he warns this won't last forever.
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