Markets Are Ripe for Disappointment, Slimmon Says

• Market gains are broadening, with equal-weighted S&P 500 and small caps performing well, supported by stellar Q4 earnings.
• The market is in a 'late cycle' phase, not the 'end of cycle,' with self-corrections in speculative tech seen as healthy.
• High earnings estimates, strong GDP outlook, and overall bullish sentiment create a 'dangerous concoction' ripe for disappointment, especially for large tech with rising CapEx.
• Investors should consider rotating into fundamentally strong sectors like financials and industrials, while being cautious about overvalued software/tech.

Andrew Slimmon of Morgan Stanley discusses the current market broadening beyond the Magnificent Seven, driven by strong Q4 earnings and a steepening yield curve. While he sees this as a healthy late-cycle phase, he warns of a 'dangerous concoction' of high expectations that could lead to disappointment, particularly for large tech companies with increasing CapEx.