Michael Lebowitz, CFA

The S&P 500 is at extremely oversold levels even as nearly half of its constituents are overbought, highlighting an extraordinary divergence between the index and its underlying stocks. This is the value/growth rotation at work, and a reversal is becoming more likely. @thedailyshot @bespokeinvest

10-23-26 Wall Street Loved Buybacks — So Why Does It Fear AI Spending? In this Short video, @MichaelLebowitz and I discuss one of the biggest mistakes investors make when evaluating AI hyperscalers like $GOOGL, $MSFT, and $AMZN: treating all negative free cash flow as equally concerning. There's a fundamental difference between a company burning cash because its underlying business is struggling and a highly profitable company temporarily sacrificing free cash flow to invest in future growth. When negative free cash flow results from operational problems, that's a legitimate warning sign. But when a company generates substantial operating cash flow and deploys that money into AI infrastructure, data centers, and other long-term investments, that's an entirely different situation. Before the AI CapEx boom, major technology companies were generating approximately $189 billion in combined annual free cash flow. That figure has come under pressure as AI spending accelerates. But projections suggest free cash flow could stabilize in 2027, recover to approximately $150 billion in 2028, and reach a record $389 billion by 2029. If those forecasts materialize, today's spending could lay the foundation for substantially greater future cash generation. And here's where Wall Street's reaction becomes particularly interesting. A few years ago, investors celebrated when Big Tech companies spent billions buying back their own shares. Buybacks supported stock prices, but they also suggested that management had limited opportunities to reinvest excess cash into the business. Now those same companies are saying they have something potentially far more productive to do with that money. Instead of simply repurchasing shares, they're investing aggressively in AI, even raising additional capital through debt or equity to finance projects they believe could generate substantial future returns. Consider the economics: if a company can finance an investment at a 5–6% cost of capital and potentially earn 20%, 30%, or even 40% on that investment, the long-term value creation could be enormous. Yet Wall Street cheered the buybacks and now worries about the investments. Of course, those returns aren't guaranteed. AI spending must eventually translate into sustainable revenues, profits, and cash flow. But the critical question isn't whether AI CapEx is temporarily reducing free cash flow. It's whether that capital can generate returns exceeding its cost. Negative free cash flow caused by a deteriorating business is a problem. Negative free cash flow caused by potentially high-return investment is an entirely different story. And that's the distinction investors shouldn't overlook. Please ❤️like, bookmark🔖, and 🔁share with fellow investors.

With another month of rising inflation, what's the Fed's likely next move? Join @michaellebowitz and me as we examine the latest inflation trends on #TheRealInvestmentShow, streaming live starting at 6am CDT on YouTube, Meta, LinkedIn, & X. (Links are in the comments)

Is the Fed putting too much emphasis on an uncertain estimate when setting interest rates? @michaellebowitz and I re-examine the Treasury Term Premium on #TheRealInvestmentShow, starting at 6am CDT on YouTube, Meta, LinkedIn, & X. (Links are in the comments)

9-25-26 From TINA To TIGA: 5% Treasuries Are Changing Asset Allocation w/ @michaellebowitz Investors are being forced to confront a reality they haven’t faced in years: there is finally a legitimate alternative to equities. For much of the post-2008 era, we lived in a TINA (There Is No Alternative) market. Rates were near zero, bonds offered little income, and if stocks could generate something close to an 8% long-term return, the choice seemed obvious. Now we’re moving toward TIGA — There Is a Good Alternative. With Treasuries yielding around 5%, investors can earn meaningful income from what is considered the market’s risk-free asset. Treasury prices can still fluctuate as rates change, but held to maturity, they repay their face value. That changes the equity risk/reward calculation. Stocks are near record highs after several strong years, valuations are elevated, and investors can potentially earn around 5% without extending all the way into 10- or 30-year Treasuries. Investors don’t need to abandon stocks for this to matter. A shift from an 80/20 stock-bond allocation to 70/30 may seem small, but across trillions of dollars, incremental rebalancing can create meaningful pressure on equities. If yields keep climbing, that incentive only increases. More importantly, higher rates may already be hurting the stock market — the S&P 500 is simply hiding it. Just look beneath the headline indexes. Equal-weight stocks are weaker. Small and mid-caps are weaker. The Dow has been weaker. Rate-sensitive sectors like utilities have been hit particularly hard. Meanwhile, mega-cap technology continues to hold up, allowing the capitalization-weighted S&P 500 and Nasdaq to look much healthier than the average stock. The extreme divergence between utilities and technology reinforces the message: higher rates are already creating significant stress beneath the surface. Small and mid-cap companies often feel tighter financial conditions first. Mega-cap technology, with stronger balance sheets and enormous cash flows, can remain insulated longer. But if Treasury yields stay elevated or continue rising, that pressure could eventually spread. That’s why watching only the S&P 500 can create a false sense of security. The headline index can remain near its highs while significant portions of the market are already buckling under higher rates. The question isn’t whether higher rates are affecting stocks. They already are. The question is how long mega-cap tech can keep hiding the damage. $TLT $BND $SPY $QQQ $RSP $IWM Please ❤️like, bookmark🔖, and 🔁share with fellow investors.

Are Bonds the Markets' next opportunity? @michaellebowitz and I look at what current bond-market conditions may be signaling on #TheRealInvestmentShow, streaming-live at 6am CDT on YouTube, Meta, LinkedIn, & X. (Links are in the comments)

The Federal Reserve raised interest rates for the first time in three years. @michaellebowitz and I examine the Fed's inflation outlook, the impact of higher energy prices, rising Treasury yields, and restrictive financial conditions on #TheRealInvestmentShow, streaming-live at 6am CDT on YouTube, Meta, LinkedIn, & X. (Links are in the comments)