The oil-to-semiconductors analogy is the most structurally interesting macro argument of the week. In the 1970s, oil rose 1,800% as the market discovered the equilibrium price for the dominant wage substitute. Semiconductors have outperformed that. The logical extension is that the cycle breaks only when unemployment becomes a political tool, precisely the moment the author says he cannot time.
From a SAA perspective, Alpha Research Capital Market Assumptions, updated April 1, 2026, price US Equities at 6.13% annualised with the second-highest dispersion in the table, standard deviation 1.7.
That dispersion reflects the exact uncertainty the author identifies: if the semi cycle runs like oil ran in the 1970s, the expected return is materially understated. If politicians decide to break it, it is materially overstated. Invesco notes that Technology appears "priced for over 6% real growth in dividends," placing it in the most expensive quadrant of their valuation matrix on both absolute and model-relative measures, Invesco, Asset Allocation Award winner 2026.
The Pro-Labour trade is working everywhere except the one sector that made labour substitution its business model. That exemption is not permanent. The question is who ends it.
Russell, Have you taken into account Mike Greens research of Passive Money & how it has been affecting the US equity market? I think that's the key to outperforrmance in the S&P the last years!
They have been expensive for a long time now... I like the wafers, but AI/semis are taking on strategic value here.... so bearishness needs to include a degree of political analysis as well.... A detente with China to allow them to build high end semis would be very bearish for example...
I agree, there is a very real political element to stock prices now. I am also perplexed by what the future holds for equities. If we live in an upside down world this time could mean equities up and bonds down…. I don't know
Elon Musk talking about AI fabrication as the next “data center” build out capex cycle. Control and production of AI fabs more important than the data build out long term…
Economist does a good job on this. Starlink was born out of a need to find mass to for SpaceX. Space born AI would help create a market for the next stage in SpaceX...
The oil-to-semiconductors analogy is the most structurally interesting macro argument of the week. In the 1970s, oil rose 1,800% as the market discovered the equilibrium price for the dominant wage substitute. Semiconductors have outperformed that. The logical extension is that the cycle breaks only when unemployment becomes a political tool, precisely the moment the author says he cannot time.
From a SAA perspective, Alpha Research Capital Market Assumptions, updated April 1, 2026, price US Equities at 6.13% annualised with the second-highest dispersion in the table, standard deviation 1.7.
That dispersion reflects the exact uncertainty the author identifies: if the semi cycle runs like oil ran in the 1970s, the expected return is materially understated. If politicians decide to break it, it is materially overstated. Invesco notes that Technology appears "priced for over 6% real growth in dividends," placing it in the most expensive quadrant of their valuation matrix on both absolute and model-relative measures, Invesco, Asset Allocation Award winner 2026.
The Pro-Labour trade is working everywhere except the one sector that made labour substitution its business model. That exemption is not permanent. The question is who ends it.
Russell, Have you taken into account Mike Greens research of Passive Money & how it has been affecting the US equity market? I think that's the key to outperforrmance in the S&P the last years!
I think he looks at the wrong passive flow - buy backs are a bigger factor in my view.
Looks like you posted SPX screenshot twice
fixed now - please view at www.russell-clark.com
Very odd. Will fix tomorrow.
What, so go / stay long semis stocks at these levels? Surely a guaranteed loss…
They have been expensive for a long time now... I like the wafers, but AI/semis are taking on strategic value here.... so bearishness needs to include a degree of political analysis as well.... A detente with China to allow them to build high end semis would be very bearish for example...
I agree, there is a very real political element to stock prices now. I am also perplexed by what the future holds for equities. If we live in an upside down world this time could mean equities up and bonds down…. I don't know
Momentum investing has been the best way to invest for 10 years now - after having a torrid 20 years
Elon Musk talking about AI fabrication as the next “data center” build out capex cycle. Control and production of AI fabs more important than the data build out long term…
Economist does a good job on this. Starlink was born out of a need to find mass to for SpaceX. Space born AI would help create a market for the next stage in SpaceX...