Balancing AI Capex Spend with Higher Energy Costs

• The US economy is supported by consumer spending and AI/capex investments, while housing remains in a 'stasis' due to high rates and prices.
• Big Tech's (Mag 7) continued heavy capital expenditure on AI is seen as a powerful tailwind for the broader tech sector, including small caps.
• Consumer resilience is noted, but a divergence between slowing income growth and sustained spending, coupled with elevated oil prices, poses a risk.
• The Fed's current 'on pause' mode for interest rates is largely expected, with a significant hurdle to overcome before considering further rate hikes.

The discussion focuses on the three pillars supporting the US economy: housing, consumer spending, and AI/capex spending. While housing remains challenged, consumer spending is resilient, and Big Tech's significant AI investments are expected to boost the broader tech sector. The Fed's current 'on pause' stance is viewed as expected, with a high bar for further rate hikes.