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BANK OF AMERICA SAYS: 'STAY LONG DETROIT, SHORT DAVOS'

This week has been one of the most volatile of an already volatile year so far, as massive spending by Big Tech on AI is colliding with the rapid rollout of new AI models that will weed out the winners from the coming revolution from the losers. Investors were already looking for other places to to put their money before this week's "software-mageddon" as shares in the Magnificent 7 were visibly underperforming the broader U.S. markets and as small caps, emerging markets and equity markets elsewhere started to look more appealing.

Bank of America, in this week's "Flow Show" say the big picture right now is "peak positioning, peak liquidity, peak inequality", in a nod to the K-shaped economy emerging under Trump's policies of heavy tax cuts, deregulation and curbs to spending on things like healthcare, while outlays on things such as his deportation push and defence increase. The team behind the Flow Show take a look at how the investors have fared with their bets on "Bro Billionaires" - as reflected by the value of a range of big tech companies like Nvidia, Meta, Palantir, Tesla, Oracle, Coinbase and bitcoin, among others - versus the real economy, as reflected by the performance of the Russell 2000 index of small cap companies .RUT since Trump's inauguration last January. The results: "Bro Billionaires" are down 6% compared with a 13% gain in small cap stocks. "We are long Main St, short Wall St until Trump approval rating up on policy pivot to address affordability," the report said.

They believe Trump's efforts to cut the prices of "energy, healthcare, credit, housing, electricity via Big Oil, Big Pharma, Big Banks, Big Tech means small & mid-cap best play for "boom" on Main St in run-up to US midterms".

(Amanda Cooper)

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