Yields spike, tech rallies anyway. UK and India hit by fiscal fear.

Transcript

Tom Tech stocks are levitating — Nvidia up four and a half percent, the sector at an all-time high, and Goldman Sachs says this 'up crash' pattern has only happened four times in history. That's not a bug, buddy, that's a feature. We're diving in, right now on Investment Flash.

Marie Good morning, it's Friday, the fifteenth of May, New York edition. I'm Marie, with Tom and Gerald. Markets are defying a lot of conventional wisdom today, so let's get into it.

Tom First up — the US tech momentum trade. Goldman Sachs dropped a note calling the current rally an 'up crash'. It's when volatility rises alongside prices, breaking the usual negative correlation. They've only seen it four times, and each time it signaled more gains. The tech sector ETF just hit a fresh record, up one and a half percent today. Nvidia surged four point four percent pre-earnings — I mean, come on, it's classic momentum compression.

Gerald Yeah look, an 'up crash' — that's a fancy way of saying the market's front-running AI earnings again. The thing is, the forward P-E on tech is high, and we're at all-time highs. I'm not saying it can't run further, but historically, stretched valuations eventually matter. To be fair, Nvidia at twenty point seven times forward isn't insane, but the sector as a whole? It's priced for perfection.

Marie Tom mon trésor, you're chasing a fifty-times multiple again, no? But seriously, this 'up crash' idea is intriguing — it's not a blow-off top, it's sustained momentum. The question is whether the bond market lets it continue.

Tom That's exactly my point, Marie! The tech sector is defying the spike in yields — the ten-year hit a twelve-month high today. And yet, here we are. It's the AI capex wave, and it's real. Remember when Gerald said semis were cooked in Q2? Look at Nvidia now.

Gerald Look mate, I'm not saying it's cooked, I'm just saying the risk-reward at these levels is getting dicey. You're buying momentum, not value. And when the music stops —

Tom But when does it stop, Gerald? The data says it's not stopping now. Goldman's pattern says more upside. I'm not fading this.

Marie Alright boys, focus. Meanwhile, across the pond, UK equities are getting smacked. The FT ran two pieces today — Westminster chaos and the 'debt cage'. Business confidence is tanking, and the gilt market is flexing its muscles. EWU down point six percent, five percent below its highs. This is a political discount you can't ignore.

Gerald Honestly, the UK is a mess. Leadership uncertainty, fiscal constraints, and a bond market that's basically setting policy. The FT's right — it's a debt cage. I've been saying for weeks, the UK is uninvestable for now. Sell EWU.

Tom One country's pain is another's buying opportunity, but I'm with Gerald here. The headlines are toxic. No way I'm touching UK right now.

Marie And then we have India — three sources confirm the first fuel price hike in four years, thanks to the Iran war pushing crude higher. INDA is down three percent this week, fourteen percent from its high. Consumer pain, inflation fears — this is a classic EM squeeze.

Gerald Yeah, and the state refiner IOC is down four point one percent today despite margins possibly improving. It's cheap at five point two times earnings, but the political risk from price caps makes it a hold at best. The sell on Indian equities, though, is clear.

Tom For real, when fuel prices spike in India, it's a direct hit to consumption. That's a sell signal baked in.

Marie Absolutely. Now let's pivot to a bright spot — Stellantis. The WSJ and FT both report a one point one seven billion dollar joint venture with Dongfeng to make Peugeot and Jeep EVs in China. Finally, a manufacturing foothold in the world's largest EV market. Stock up three point two percent today, and the price-to-book is a ridiculously low zero point three five. It's deeply undervalued, and this catalyst is real.

Tom I love it, Marie. Stellantis is a value play with a growth kicker. And the loser here is Nio — shares down four point four percent on this news. More competition from a global player with local production? No thanks.

Gerald To be fair, Nio's forward P-E of negative three hundred and thirteen says it all. That's not a stock, it's a hope. Stellantis, on the other hand, is a steal — I almost never say that about an auto stock, but here we are.

Marie Gerald chéri, you flatter yourself thinking the bond market cares, but I'm glad you're on board with Stellantis.

Gerald Marie, you know I'm a sucker for a good price-to-book.

Tom Alright, airlines. The FT says it could be time to bet on airlines, and they're calling out easyJet explicitly. Trading at an enterprise value of four times operating profit versus nine times in 2019, near its fifty-two-week low. That's deep value. Ryanair and IAG also look cheap. IAG at a P-E of five point nine? It's unloved and mispriced.

Gerald Look mate, I'm suspicious of airlines in general — capital-intensive, cyclical, and prone to disaster. But the valuation on easyJet is compelling. The FT's call is hard to ignore. If travel demand holds, there's upside.

Marie I'll play contrarian here — regulatory overhang in Europe with emissions targets could cap upside. But for a trade, not an investment, maybe it works. Voilà.

Tom Fair enough. Now, France is having a 'Le Total bashing' moment, says the FT. Windfall tax calls on TotalEnergies after profits jumped from the Iran war. The stock is up thirty-seven and a half percent year to date, near a fifty-two-week high. Political risk isn't priced in. Sell TotalEnergies and maybe even French equities broadly.

Marie Écoute, I'm French — this is a classic. The government sees profits, and they want a piece. The windfall tax threat is real, and sentiment on French stocks could sour. EWQ is already seven percent below its high. I'd take profits here.

Gerald Yeah, and it's not just France — it's a precedent. If energy companies keep printing money, populist pressure builds. TotalEnergies is a sell on the political overhang alone.

Tom Crypto cross currents — CoinDesk highlights two forces. Regulatory tailwind from the CLARITY Act passing a Senate panel, pushing XRP and Doge up five percent. But the yield headwind from Treasuries at twelve-month highs is historically a drag on bitcoin and gold. It's a tug-of-war. Watch bitcoin — stuck below its two hundred-day moving average despite the good news.

Gerald Honestly, crypto is uninvestable until the macro resolves. Rising real yields kill the store-of-value narrative. I'm watching from the sidelines.

Marie But the regulatory clarity is huge, non? It could pave the way for institutional flows. I'd say watch, don't trade yet. The next Fed meeting will probably decide which force wins.

Tom Speaking of macro, MarketWatch has a contrarian sell signal on the S&P 500. They say even strong Nvidia earnings won't rescue the broader market. The S&P is at an all-time high, but breadth is deteriorating. It's a high-risk short, but the signal is worth noting. Hold Nvidia, but maybe hedge with a small short on SPY.

Gerald I like the sound of that — a narrow market, overconcentrated. The equal-weight S&P is up only five point six percent year to date versus nine and a half for the market-cap version. That's a big gap. If the megacaps stumble, the index falls.

Tom And the FT actually makes the bull case for that — extreme concentration means the rest of the market has room to run. IWM is up fourteen point three percent year to date, and the equal-weight RSP has catch-up potential. So maybe the trade is long small caps and equal weight, not short the S&P.

Gerald Right, but the sell signal on SPY can coexist with a rotation. If you think the market broadens out, you buy IWM and RSP. If you think the top falls off, you short SPY or buy some puts. I'm leaning toward the rotation trade — the valuation gap is too wide.

Marie And let's not forget the convergence we're seeing. Multiple sources on UK fiscal risk, India fuel hikes, Stellantis JV — when three publishers agree, it's a strong signal. The UK story is particularly powerful: political chaos meets market discipline. That's a sell.

Tom And the our view synthesis really ties it together. We've got selective defiance: tech rallying into yield spikes, while the rest of the world feels the pain. The dispersion opening up is huge — SPY at highs, RSP trailing. That's the trade: fade the consensus, favor laggards. And watch the bond market. If the Fed pivots, the yield headwind could vanish overnight.

Gerald Yeah, the short-duration trade is crowded. A dovish Powell or a risk-off event could trigger a violent bond rally. That would un-suppress gold and crypto. The bear case for tech is that it's a momentum trap built on AI capex hope, not earnings reality. Nvidia's earnings tonight are a catalyst either way.

Marie And one thing missing from today's coverage: oil supply chain beyond India. The Iran conflict is driving crude prices, but no major oil sector report today. The windfall tax talk in France hints at the political backlash, but the energy sector is up twenty-seven percent year to date. If Iran escalates, oil spikes, and the rate narrative gets more complicated.

Tom So, to sum up: buy US tech on momentum but have an exit plan, sell UK and India, buy Stellantis and maybe airlines as a deep value play, sell TotalEnergies on political risk, watch crypto, and consider the rotation into small caps and equal weight. It's a market of dispersion, not direction.

Gerald And as always, none of this is investment advice. Markets change, opinions shift, and your capital is your own responsibility.

Marie Exactly. It was a lively one today, boys. Tom, your enthusiasm is always infectious, and Gerald, you keep us honest. See you Monday morning.

Tom Back on Monday — have a great weekend, everyone.

Gerald Cheers.