Market sell-off a 'de-risking' from a 'very high basis', says Lunate

• Market sell-off is a 'de-risking' from a 'very high basis' and a 'higher rate scare' driven by a 'hot inflation print'.
• Lunate is 'quite optimistic on the cycle', viewing it as 'even higher for even longer', and recommends rotating out of 'Mag 7' into companies benefiting from AI efficiency gains.
• Regional markets and oil are 'looking through' geopolitical escalations, with oil prices expected to 'stay elevated' and contributing to headline inflation.

The discussion characterizes the recent market sell-off as a healthy 'de-risking' from a position of strength, driven by inflation concerns. Lunate maintains an optimistic long-term view on the AI cycle, suggesting a rotation out of the 'Mag 7' into broader efficiency-gaining companies. Regional markets and oil are seen as looking through geopolitical disruptions, with oil prices contributing to elevated headline inflation.