Michael Hartnett's New Favorite Market Sector

Michael Hartnett identifies Materials as the new secular bull market within a 'bubbly war/peace stagflation' environment. He recommends a barbell strategy of AI chips and distressed cyclicals as central banks turn hawkish.

Key Takeaways

• 1.The Materials sector is identified as the 'new bull on the block', driven by a geopolitical resource grab, AI capex, and housing shortages.
• 2.Developed Market (DM) central banks are turning hawkish, with rate hikes outpacing cuts for the first time since November 2023.
• 3.A 'bubble barbell' strategy is recommended, pairing long 'hubris' assets (AI & chips) with long 'humiliation' assets (Materials, China, UK, commodities).

Table of Contents

• Chart 3: DM central bank rate hikes now outpacing rate cuts
• Chart 2: Materials... the new bull on the block
• Chart 11: Stealth Chinese renminbi appreciation
• Chart 12: Steel testing its '08 high in geopolitical grab for resources
• Chart 15: $136bn inflow to cash is largest since Jan'26
• Chart 16: $16.4bn inflow to IG funds biggest since Jan'26

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