Many Happy Returns Shopping the Drop: Is Anything Actually Cheap?
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Apr 1, 2026 They go bargain hunting across stocks, bonds, commodities and countries to see what looks cheap after recent market falls. Conversation covers tech concentration, NVIDIA risks, energy’s rally, and sector rotation. They also weigh gilt yields, inflation expectations, commodities as hedges, and how valuation tools like CAPE and FCF yield behave during stress.
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Mega Caps Drive Most Of The Pullback
- Mega-cap tech (the Magnificent Seven + Oracle) accounted for roughly 85% of the S&P's decline despite broad earnings resilience.
- Tech earnings forecasts remain strong, but concentration meant their drawdowns drove most of the index move.
AI Capex Has Eaten Tech Free Cash Flow
- Free cash flow yield for the US index has collapsed as capex surged for AI data centre build-outs.
- Massive capex converts previously cash-generative tech firms into heavy spenders, reducing index free cash flow dramatically.
China Is Gaining An Edge In AI Research
- China now leads in NeurIPS first-author AI researchers, suggesting competitive pressure on US AI advantage.
- That global research shift raises the risk US hyperscalers' expensive capex could be undercut competitively.