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Until very recently the market became very narrow, with only the largest of large-cap tech hanging in. As of this week, about 45% of companies in the S&P 500 are down more than 30%. With 60% down over 20%, 80% down over 10%.

The index has been looking pretty resilient, but there's a lot of weakness under the surface. Part of that has been from companies hurt by rising rates (defensive assets such as staples, utilities, etc). For companies that borrow fairly heavily, their borrowing costs have been going up. 

In particular, the strength has been from companies generating lots of free cashflow and showing pretty steady dividend growth. Those have been his firm's focus.

In the last 2-3 weeks, this sector has seen significant weakness. It's probably the area of the market that attracts the most focus. Now two of the big tech companies have gone from generating gobs of cash to having negative cashflow due to all their investments. In particular, that's META and GOOG.

That's generating questions for people who look at long-term rates going up on one side and cash generation going down on the other.

Everyone will point to what should be a spectacular earnings season, and ask why there'd be any weakness in, say, semiconductors? Earnings numbers are eye-watering on things like memory stocks and AI chip producers. It always comes down to what's the multiple, and how sustainable is it? Market's asking some questions about that right now.

Private credit has had it rough. Bread-and-butter is investing in real assets, which have some amount of inflation protection. Pretty good cashflow generator. Relies on relatively cheap cost of money to continue to build -- elevated long-term rates make that harder.

Well below 200-day MA. Pulling back to 200-week MA, may provide some good support. Broke lows it made in March. He's not looking at it, given weakness in the sector.

Sector's been performing well. Excellent pricing power. Generates lots of cash. Earnings picture excellent. Some capex on the horizon, but modelling double-digit FCF generation per share. He'd hold. Classic good-and-getting-better story.

Marked deterioration in aerospace companies. Stay away for now, sector is not supportive. In his portfolio today, industrials make up only ~4% (down from 18-19%).

He owns only BBD.B.

Marked deterioration in aerospace companies. Tremendous performer, but broke down through its 200-day MA in August. In his portfolio today, industrials make up only ~4% (down from 18-19%).

He owns only BBD.B.

Whole group is under pressure. Down over 20% and way below previous lows. As 60% of central banks raise rates, a fair bit of $$ has come out of cyclical assets.

His firm always looks through the lens of "Would they buy it today?" Making a significant bet on the future of AI, and market's questioning that. Companies building data centres are under pressure. Now cashflow-negative. Broke long uptrend. 

Risk. Be cautious. A show-me story. Just broke below 200-day MA, and there's lots that can go wrong below that.

Gone through a big correction. Be careful. His team needs to see fundamental characteristics that are good and getting better, or acceleration in underlying numbers. Earnings growth estimated 54% this year, but only 15% for next. MAs have rolled over, technically broken.

Long-term picture for infrastructure is positive, but the rate is in question. Impacted by rising cost of money.

Probably the most solid of the semis. In consolidation range since end of April. Trading above rising 200-day MA. He's concerned about the sector; SOXX has broken down fairly badly today (only ~24% of companies are on favourable technical footing).

Best chart and fundamental picture. Quality name. That said, if it breaks the 200-day MA then he's gone. Hanging in pretty well, hold for now.

He's concerned about the sector. Has broken down fairly badly today. Only ~24% of companies are on favourable technical footing, with 75% being weak (and that number is growing). Korean market has broken down quite badly, and a large percentage of that index is comprised of memory companies.