Thoughts on the CPI read and what it means for Q4 tech bets
That CPI number came in a bit hotter than some were anticipating, and it's interesting to see the market's initial shrug before a bit of a wobble. For me, it solidifies the Fed's higher-for-longer stance, which naturally puts a different lens on those growth-sensitive names. I'm not ready to dump everything in tech, but the easy money there feels over for now. Instead, I'm watching the defense contractors and infrastructure plays a bit more closely – they're less rate-sensitive and could see some sustained tailwinds given global events and domestic spending bills. It's a rotation, not a retreat, but definitely shifts where I'm looking for decent risk-reward. Still keeping an eye on how the bond market digests this over the next few days, as that will really inform the equity side.
I agree the 'higher for longer' narrative seems cemented, which does put a damper on the valuation multiples tech often enjoys. It's not necessarily a dump-and-run situation, but a re-evaluation of which tech sectors or even specific companies have robust enough fundamentals to weather a higher discount rate is definitely in order. Are you leaning more towards established tech with strong cash flows, or does the AI narrative still hold enough weight for you to selectively pick growth?