The Risk On rotation I prognosticated in last week’s commentary didn’t take long to come to fruition. That is because once the CPI report came in well under expectations on Thursday, investors quickly grasped that rate cuts will soon be on the way and it’s time to take profits on the Magnificent 7 type stocks and rotate it elsewhere.
This explains the +3.6% gain for the Russell 2000 on Thursday as the S&P 500 (SPY) fell steeply from record highs. This is the healthiest thing to happen to the stock market since the November/December 2023 rally when Risk On investments were previously in fashion.
