Joel Elconin – Post Rate Hike Volatility In US Equities, The AI Infrastructure Buildout Presses On
Summary
Technology's cash-rich leaders rebound fastest after rate hikes because they borrow little, while sectors dependent on financing keep losing ground.
The 10-year Treasury yield (the benchmark risk-free rate) nearing 5% is draining consumer staples, utilities, and dividend-paying stocks as investors take guaranteed returns.
JB Hunt's warning that higher costs will cut earnings shows freight and transportation names are the clearest casualties of rising rates.
Generac's $2.5 billion generator agreement with Amazon shows AI datacenter spending is now lifting power equipment makers and electrical contractors, not just chipmakers.
Oracle's debt-funded AI buildout shows heavy borrowing punishes stocks in a rising-rate environment, while chipmakers with credible guidance still screen cheap.
Joel Elconin's takeaways
- Top takeaway He argues the post-Fed selloff reversed once the Fed supplied clarity - with rates likely up another quarter point by year-end - and that cash-rich tech stocks are largely immune to rising rates.
- He sees no slowdown in the AI buildout and favors the 'picks and shovels' electrical infrastructure trade (Generac, Eaton, Quanta) as the next leg.
- He argues AI names like Broadcom and Nvidia are cheap if the companies meet their own projections.
- He dismisses the Anthropic AI-existential-risk headlines as media clickbait and says he is in the more-compute, not less-compute camp.
- He believes the AI stage is still early, pointing to Meta's heavy spending starting to show returns.
Elon Musk's takeaways
- Top takeaway The guest cites Musk's tongue-in-cheek quip about Anthropic's 10 percent AI-destroys-the-world warning - roughly, 'what kind of allocation do you want on my IPO?'