Barry Knapp: I Cut Tech. Here's Why.

The U.S. economy currently exhibits a K-shaped divergence, where restrictive monetary policy disproportionately burdens floating-rate borrowers and small businesses while benefiting high-quality, long-term fixed-rate entities. Barry Knapp, founder of Ironsides Macroeconomics, argues that the Federal Reserve’s reliance on balance sheet expansion has created excessive accommodation for large corporations and asset owners. To address this, he advocates for a policy shift involving lower interest rates, the replacement of long-term securities with shorter-term assets, and banking deregulation. While inflation remains a concern, Knapp projects stabilization around 2.5% as goods prices normalize. Investors should remain cautious regarding the tech sector, where capital spending growth is decelerating, and instead favor industrials, energy, and financials, which stand to benefit from a potential manufacturing renaissance and a steeper yield curve.