Mag Seven to Lag Seven. That's a regime change.

Transcript

Tom The crown is slipping, buddy! We are seeing a massive shift in where the big money is hiding.

Marie It’s Wednesday, June twenty-fourth, and you’re listening to the New York Edition of Investment Flash. I’m Marie, joined by Tom and Gerald.

Gerald Yeah look, the tech giants aren't just wobbling, they're actually dragging the indices down now. It's a complete regime change.

Tom No way, Gerald — look at the hardware side! SK Hynix is planning a twenty-nine billion dollar listing in the U.S. to fund AI memory capacity.

Marie Wait — wait a second, that matches the Saudi Aramco initial public offering from twenty-nineteen. That is an absolute monster of a deal.

Gerald Honestly, it’s about time someone admitted memory is the bottleneck, but a thirty billion dollar listing? In this environment?

Tom But that's the point! The Semiconductor ETF is up nearly sixty-seven percent year to date and it's still seven percent below its high.

Marie Right, and that tells me the trade isn't actually crowded yet. The demand for AI infrastructure is clearly still accelerating.

Gerald Fair enough, but look at Nvidia. It fell four percent last session and it's now fifteen percent below its fifty-two-week high.

Tom Oh come on, that's just a healthy breather for the king. It was bound to happen eventually.

Gerald An analyst raising a price target after a fifty percent rally is just a very expensive way of saying 'I saw what happened.'

Marie Ha — that's brutal, but honestly, he's not wrong about the lag we're seeing in the big names.

Tom Alright, alright — but Marie, you were the one championing Accenture yesterday, and the Financial Times is backing you up today.

Marie Exactly! Lex is arguing the selloff in IT consultants is totally overdone. Accenture is trading at a forward price-to-earnings ratio of less than nine.

Gerald Yeah look, an eight point seven multiple for a company that can actually implement AI projects? That does look like a bit of a gift.

Tom See? Value-man Gerald likes a tech stock! I knew we'd get there eventually.

Marie Not so fast, Tom. This is a rotation story. Microsoft is down twenty-one percent year to date. The 'Mag Seven' are officially the 'Lag Seven'.

Gerald Exactly.

Tom One hundred percent.

Marie That's the whole story.

Gerald The thing is, investors are realizing that software might actually be disrupted by AI before it gets a boost from it.

Tom For real? Look at Indian IT exporters like Infosys then — they are getting absolutely crushed on that exact fear.

Marie Right, Infosys is down over forty percent this year. Their weight in the Indian index has hit a record low.

Gerald Which brings us back to the hardware side. China is now throttling mineral exports to Japan to put pressure on Prime Minister Takaichi.

Tom That's why the Rare Earth ETF is up nearly twenty percent year to date. Supply is tightening everywhere.

Marie Hold on, if Japan's manufacturing gets hit by a mineral choke, that's a massive headwind for Japanese equities.

Gerald To be fair, the Japan ETF is still up fourteen percent this year, but this geopolitical shock could reverse those gains very quickly.

Tom Buddy, there is just no safe place to hide today. Even the oil market is a total mess.

Marie No but that's exactly my point — you have one hundred and twenty-five billion dollars in cargo stranded in the Persian Gulf right now.

Gerald And yet, China's independent refiners have cut their operating rates to a nine-year low. Demand is cratering while supply is blocked.

Tom It's a binary setup for the Oil Fund. It's either going to the moon or falling off a cliff.

Marie Wait — wait a second, that's why our view today is to own oil volatility rather than picking a direction. It's too unpredictable.

Gerald Spot on.

Tom Totally.

Marie That's it.

Gerald While we're on volatility, we have to mention the Beijing probe into Futu Securities and Tiger Brokers. That is a direct hit to retail trading platforms.

Marie Look, Futu is already down forty-five percent this year. This regulatory overhang is just getting deeper and deeper.

Tom Wait, but didn't economist Diana Choyleva say this actually helps Hong Kong in the long run? Like, it makes the city more important for offshore yuan?

Gerald Yeah look, it's a contrarian take. The Hong Kong ETF is near its fifty-two-week low. If you're a value hunter, that's where you're looking.

Marie I’m going to push back here — calling the bottom on Hong Kong again? That’s like six bottoms this cycle.

Tom Hah — yeah, yeah, fair enough. I sounded the same about Cisco back in twenty-twenty.

Gerald Speaking of being wrong, the market seems very complacent about UK Gilts. People are obsessing over Westminster politics and ignoring the global macro.

Marie Well, the Financial Times says gilts are cheap right now. The Gilt ETF is near its low for the year.

Gerald It's a classic case of political noise drowning out the yield story. If global turmoil spikes, those gilts are going to re-rate fast.

Tom If you're scared of the turmoil, Evercore is telling everyone to just buy Exxon Mobil or Mondelez as a negative beta hedge.

Marie No, but think about it — Exxon is up about fourteen percent this year and it only has a price-to-earnings ratio of thirteen. That’s a real safety net.

Gerald Honestly, I’m just surprised it took a strategist note for people to realize that buying a company with actual earnings might be a good idea.

Tom Oh, that's brutal. Just because we're not all in bonds like you, Gerald!

Marie Alright, let's look at the big picture. We’re seeing a rotation within tech, not out of it. It’s moving from software to hardware infrastructure.

Tom Right, and don't forget that six billion dollars in forced selling we saw in Korean chips. That was mechanical, not fundamental.

Gerald True, but when the technical damage is that heavy, the recovery is rarely a straight line. Investors are jumpy.

Marie The bottom line is that the 'Lag Seven' narrative is tempting, but a single positive AI catalyst could trigger a massive short-covering rally.

Tom I'm staying bullish on the chips, buddy. The SK Hynix listing is the real signal.

Gerald Just keep an eye on that fifty-two-week high. Most of these names are struggling to get anywhere near it.

Marie As always, none of this is investment advice. If you're finding this helpful, hit follow on Spotify or check investmentflash.com for the full digest with all our sources.

Tom We'll see if my chip trade holds up by tomorrow!

Gerald I'll have my bond charts ready when it doesn't. See you tomorrow, seven-thirty London.

Marie We're back for the London Edition at seven-thirty a.m. London time. See you then.