Rising Yields & Rally Risk: The Investment Committee's Strategy 10/14/26

Thermo Fisher Scientific

• Kari Firestone · Aureus Asset ManagementBullish

  Thermo Fisher has broken out after years of COVID hangover; research funding is loosening.

  Firestone says Thermo Fisher has finally broken out. She says the stock needed years to recover from the COVID hangover. The breakout is her main evidence for a bullish view on the stock.

  “Thermo Fisher, this stock has finally broken out and has taken years to get over the COVID hangover.”at 46:04

• Joe Terranova · Virtus Investment PartnersBullish

  Money for research is finally loosening, which is good for Thermo Fisher.

  Terranova says research funding is finally starting to loosen up. He argues this is good for Thermo Fisher, which sells into research spending. He is building on Firestone's point that the stock has broken out after a long recovery.

  “And now we're finally starting to see money loosen up for research, and that's good for Thermo.”at 46:11

CoreWeave

Across the shows: 5 speakers in other episodes, 1 bullish and 5 bearish calls, past 30 days

• Joe Terranova · Virtus Investment PartnersBearish

  Rising yields and stressed CoreWeave bonds threaten debt-funded AI buildout; stock down 15%.

  Rising yields make it harder to access debt markets to fund the AI build-out. CoreWeave's equity fell 15% on the day, and its bonds trade around 80 cents on the dollar, which Terranova calls troubling for one of the original neoclouds that relies so heavily on debt. He says this debt-market stress is spilling over into Oracle and is one reason the market is soft.

  “...CoreWeave, which was... Is down 15% today for the equity, but you're looking at the bonds trading on 80¢ on a dollar. That's troubling for one of the original neo clouds that is so reliant on the debt market.”at 3:07

Bank of America

Across the shows: 3 speakers in other episodes, 1 bullish and 2 bearish calls, past 30 days

• Stephanie Link · Hightower AdvisorsBearish

  Bank of America is losing share; fee, trading and FICC revenue lagged peers, so she is trimming.

  Excluding a one-time charge, the quarter was acceptable on net interest income, net interest margin, loans and credit. But fee income fell 13%, total trading revenue fell 5%, and FICC fell 17%. Equities rose only 11%, against JPMorgan up 49% and Citigroup up 14%. She concludes Bank of America is losing share, while acknowledging one quarter is volatile. She is trimming a sizeable position.

  “Bank of America was very disappointing... fee income fell 13%, trading total revenue down 5%, equities only up 11% and that compares to JPMorgan up 49%.”at 10:11

Wells Fargo & Company

Across the shows: 3 speakers in other episodes, 4 bullish and 0 bearish calls, past 30 days

• Stephanie Link · Hightower AdvisorsBullish

  Wells Fargo's NII is stabilizing and loans grew 11%, making it a better opportunity than BofA.

  Wells Fargo's headline quarter was soft mainly because of taxes, and pre-provision net revenue was a bit softer, but the core earnings beat. The key to the stock is stabilizing net interest income and margin, and that has improved. NIM grew 2.4 basis points, after falling 13 basis points in the first quarter and 4 in the second, and guidance for NIM was good. With NII stabilizing, the focus shifts to growth: average loans grew 11% in commercial and industrial, credit card and auto, with expenses in line. She is adding to the position.

  “Net interest income also is stabilizing. And so now you can focus on growth. ... the average loans grew 11% in C and I, credit card and auto.”at 11:34

The Goldman Sachs Group

Across the shows: 4 speakers in other episodes, 3 bullish and 1 bearish calls, past 30 days

• Steve Weiss · Short Hills Capital PartnersBearish

  Goldman's deal pipeline hit by rising rates; tough to hold for six to nine months despite great quarter.

  Goldman had a great quarter, with equity trading excelling while fixed income and commodities trading were weaker. But in a rising-rate environment, the M&A and IPO pipelines take a hit, so for the next six to nine months the stock can be very tough to hold. He expects it to keep outperforming on a relative basis, because he is uncomfortable with most of the rest of the market. He owns the stock.

  “So it depends on what your holding period is. I'd say for the next six months, maybe nine months, these can be very tough stock to hold.”at 13:38

iShares Russell 2000 ETF

• Steve Weiss · Short Hills Capital PartnersBearish

  Small caps (IWM) will be particularly hard hit by rising rates in the short term.

  Rising rates are expected to hit small caps hard, and the Russell 2000 ETF has meaningful exposure to financial stocks, which adds to the pressure. He offers IWM as an example for a short-term trade, and says the bull case relies on concentrated leadership that is trading poorly.

  “for a short term, trade, I'm sure the IWM, which is the Russell. Small cap stocks will be particularly hard hit with rising rates, not to mention the exposure that the IWM, that the Russell has in financial stocks.”at 13:58

State Street

• Joe Terranova · Virtus Investment PartnersBearish

  State Street's small miss against very high expectations and crowded momentum positioning points to near-term weakness.

  Expectations going into the report were very high, and State Street missed slightly on net revenue and fee revenue. Because the stock had been a relative outperformer, momentum funds had crowded in, so a modest miss produced a large punishment. He notes the stock is heading toward its 200-day moving average and says a test of that level is a tough call. He owns the company through the desk's ETF.

  “Very high expectations coming into this report for State Street, and they had a miss. The miss wasn't significant.”at 15:50

Taiwan Semiconductor Manufacturing Company

Across the shows: 3 speakers in other episodes, 2 bullish and 1 bearish calls, past 30 days

• Steve Weiss · Short Hills Capital PartnersBullish

  TSMC is one of Weiss's largest positions; he stays long despite capex-peak risk.

  He owns TSMC as a much bigger position than Nvidia, since they are essentially the same play. The main concern is whether the stocks are signaling that the capex cycle has peaked, because stocks typically discount peaks a year ahead. A plateau in spending rather than a decline would still cause valuations to reset lower if capex growth stops, but he is staying with TSMC as one of his largest holdings.

  “Right now, I'm still sticking with Taiwan semi as one of my largest positions and also holding on to Nvidia.”at 20:49

NVIDIA

Across the shows: 30 speakers in other episodes, 24 bullish and 9 bearish calls, past 30 days

• Steve Weiss · Short Hills Capital PartnersUncertain

  Still holding Nvidia, but market withholds reward despite compressed multiples; TSMC is preferred.

  Nvidia gives him pause. Multiples have compressed as earnings and revenue grew, yet the market still doesn't reward the company, which it seems to take for granted will keep growing. A recent post-earnings rally was minor, and relative to TSMC it has been a poor performer. He is holding it but is less comfortable than with his larger TSMC position.

  “Nvidia does give me a little pause though because the market seems to be at that point over the last whatever year of not rewarding the company”at 21:00

Netflix

Across the shows: 2 speakers in other episodes, 1 bullish and 0 bearish calls, past 30 days

• Steve Weiss · Short Hills Capital PartnersBearish

  Netflix is dead money; consumer demand slowing and streamers face a tough path as they raise prices.

  Weiss sold his Netflix position, which he had recently re-entered. He says the stock has no fundamental problem, it has absorbed a lot of news, and it is dead money. He ties this to his weak view of the consumer and to demand slowing. He expects all streamers to struggle as they raise prices, with Netflix the exception so far. He would rather keep the cash on the sideline than hold it.

  “I just don't believe that that's where I wanna be putting my dollars. So I think it's dead money. I don't see anything really wrong with the stock here.”at 39:04

NextEra Energy

Across the shows: 1 speaker in other episodes, 1 bullish and 0 bearish calls, past 30 days

• Kari Firestone · Aureus Asset ManagementBullish

  NextEra is a play on rising power demand; it is the largest builder of new US power.

  Firestone owns NextEra. She argues that next year the stock is a play on more power, because the US needs more power generation. She cites NextEra as the largest builder of new power, and so she sees a long runway for growth.

  “Well, next year is a play on more power. We need power generation in this country. They are the largest builder of new power, and we therefore think if there's a long runway to go.”at 39:52

J.B. Hunt Transport Services

• Joe Terranova · Virtus Investment PartnersBullish

  JB Hunt's setup is positive: the earnings contraction is guided, so the stock could beat the cut guidance.

  Terranova owns JB Hunt through his ETF. The CFO guided last month that earnings would fall 5 to 10% on rising costs of about $25 million, so the street expects deceleration. Terranova argues the bad news is already out, so the setup is positive. He expects results to beat the weaker guidance, even though tariffs added friction to acquiring carrier capacity.

  “I think the setup is a positive one for JB Hunt going into tomorrow because we've gotten in front of what we expect to be the contraction in earnings.”at 44:00

US stock market outlook

• Joe Terranova · Virtus Investment Partners

  Market is unhealthy and narrow; positioning unwind could precede late-October mega-cap earnings revival.

  He calls this an unhealthy market because a very small, concentrated basket of stocks is carrying the index through earnings season. Higher yields are pressuring the AI-related debt and equity trade, so investors are likely to cut positioning ahead of earnings. He argues the trillion-dollar companies' earnings could be the catalyst that revives the bull market at the back end of October, but what is in front of investors could bring more selling first.

  “I believe this is an unhealthy market because we're relying on a very small concentrated basket of stocks to carry us”at 2:26

• Kari Firestone · Aureus Asset Management

  A 5-10% pullback would be healthy after the S&P's 19.5% run and rising rates.

  Since the end of March the S&P is up 19.5% after a 5% drawdown, and mega-cap tech names are up roughly 30 to 40%. With inflation high and rates rising, the market has run ahead of itself and should react to rates. A 5% to 10% decline would be healthy in her view. She adds that the pullback should come from leaders whose earnings matter, and that the earnings reports about two weeks out are the ones that count.

  “The market has had this enormous run. Maybe we're a little ahead of ourselves. There should be some reaction to the market because of interest rates. And if it were to come in 5% to 10%, that would be healthy in our opinion.”at 4:38

• Steve Weiss · Short Hills Capital Partners

  Not time to add new money; 30% earnings growth already pulled forward and concentrated in few stocks.

  The bull case rests on 30% earnings growth, but that has already happened and most of it was pulled forward. The growth is also highly concentrated in one segment of the market, which has shown particular vulnerability and is trading poorly relative to the rest. He has been saying for the last month that it is not the time to put new money into the market, and small moves of 5% to 10% are not cheap enough to change that.

  “In the bull case, you've got 30% earnings growth. Okay. That's already done. ... Most of that's been pulled forward, number one. And number two, it's highly concentrated in a certain segment of the market.”at 14:59

AI chips & semiconductors

• Kari Firestone · Aureus Asset Management

  Chip stocks likely fall about 30% from peak before plateauing, as past cycles at Nvidia, Micron and TSMC showed.

  Chip stocks have seen unprecedented acceleration and interest over the past year, so a decline is not surprising. Based on how cycles have played out at Nvidia, Micron, TSMC and Texas Instruments, stocks often rise, then drop about a third before plateauing. She therefore expects a drop of roughly 30%, and says the question is how far the decline goes and whether it accelerates. She calls this unhealthy, and her hedge is that 30% is a rough benchmark ('maybe').

  “I would say 30% is where a lot... Lots of times the cycle goes up, and then they drop about a third before they start to plateau.”at 19:23

• Liz Thomas · SoFi

  Chip fundamentals intact with three-to-five-year commitments; hard to turn bearish on semiconductors.

  There has been no fundamental deterioration yet. Long-duration semiconductor stocks are naturally pressured when yields rise, and the selloff is driven by short-term headlines. Demand is committed out three to five years, and supply still cannot meet demand. The real risk would be demand slowing and showing up in revenue growth, which has not happened. So it is difficult to get really bearish on the complex, and selling at the bottom of a sharp fall is rarely right.

  “Markets have been trading on some of those short term headlines, but the fundamentals for these companies are very long term. We're looking at three to five years into the future.”at 22:18

Defense

• Michael Duffey · U.S. Department of War (Department of Defense)

  Long-term government deals plus contractors' own capex will make the missile production ramp stick.

  Duffey says the industry is moving toward a more commercial relationship with the government. He cites two factors: a government commitment to long-term deals, and contractors such as Lockheed investing their own capital to expand. He argues that these together will make the production growth durable.

  “And I think we're seeing that because we're getting not only a commitment from the government to ensure long term deals, but we, companies like Lockheed are making their own investment of this capital to get this growth, and I think that will be part of what makes this stick.”at 36:32

• Liz Thomas · SoFi

  Defense stocks are trading down on expected Democratic sweep of Congress, but the war isn't over, so opportunity remains.

  Thomas picks aerospace and defense as a final trade. She says the group is trading down because of expectations that Democrats will sweep Congress. She argues the war is still ongoing, so the group still has opportunity despite the political pullback.

  “I'm using aerospace and defense this time. I think trading down because of the expectation of a dem sweep of congress, but the war isn't over. So it has opportunity.”at 45:52

Gold & precious metals

• Liz Thomas · SoFi

  Gold has structural demand again from central banks amid fiscal indiscipline; expects gold to rise before year end.

  Thomas likes gold at current levels. She had exited earlier in the spring because she did not understand what was driving it. She now agrees with Morgan Stanley that there is structural demand for gold again. She expects central banks to keep buying gold because of fiscal indiscipline, and she expects gold to rise again before year end.

  “I like gold here... there is structural demand for gold again... And I think central banks will continue to have demand for gold, and we're gonna see gold perk up again before year end.”at 40:09

• Joe Terranova · Virtus Investment Partners

  Precious metals rally looks parabolic and fragile; silver's fall as yields rise shows it is not a safe haven.

  Terranova does not trust the recent precious metals move. He thinks it looked like a parabolic peak earlier in the year. He points to December silver falling 6% that day as yields rose. He argues that in a rising-yield environment metals should act as a port in a storm, but they are not doing so.

  “I still do not trust the move that we're seeing in the precious metals. It looks like we have a parabolic peak earlier in the year.”at 40:34

US growth & recession risk

• Liz Thomas · SoFi

  Financials aren't confirming a cyclical economy; expects a rough patch through midterms, relief rally later.

  She uses financials to confirm or deny the economy's cyclical nature, and right now they are not confirming it. Earnings were mixed, with surprising disappointments and cautious CEO comments, and a slowdown in deal flow hit names like Goldman Sachs. Many headwinds are not showing foreseeable solutions, so the rough patch could persist through the midterms. A relief rally toward the end of the year is a big possibility.

  “I look at financials to either confirm or deny the cyclical nature of the economy, the cyclical nature of the market. And right now, they're not confirming it. They're confirming that we're in a rough patch.”at 8:06

Enterprise AI adoption & AI software

• Kari Firestone · Aureus Asset Management

  Banks spend heavily on AI, but none yet report AI-driven revenue or profits; the market is waiting.

  Going through the bank earnings transcripts, she found that apart from Morgan Stanley, no bank said it is generating substantial revenue from its AI use in operations. The banks acknowledge heavy AI spending as an important factor on their platforms, but none has discussed the earnings or profitability AI is producing. She says the market is waiting to hear it from CEOs because the cost is known.

  “But no one has talked about how they're generating... earnings and profitability from it. I think the market is waiting for that and hoping that they'll see it soon.”at 12:42

US Treasuries & yields

• Steve Weiss · Short Hills Capital Partners

  Rates will keep rising, but the 10-year is a good entry point with a great return.

  Weiss's final trade is the 10-year Treasury. He expects yields to keep rising. He still calls the current level a pretty good entry point with a great return. The view is a trade, with little supporting analysis beyond the level of yields.

  “I'm going with the, ten year. While I think rates will continue to rise, this is a pretty good entry point and a great return.”at 45:44