Stock market rotation is a warning of trouble ahead

We doubt this year’s rotation in US equities will be heavily influenced by today’s ruling from SCOTUS that Donald Trump’s IEEPA tariffs are illegal, even if the president now tries to raise tariff revenue by other means. Granted, the period around ‘Liberation Day’ last year caused ructions in the performances of small caps vis-à-vis large caps and in value stocks vis-à-vis growth stocks. But this time around the main aim of the president may be to raise tariff revenue in different ways rather than to raise more of it. So, the economic consequences may not be that large. That aside, this year’s rotation could be a warning of trouble ahead if the latter stages of the dotcom bubble are a guide. And it could be harbinger of more rotation.