MW Investors would be crazy to turn bearish on stocks now, says veteran strategist. Maybe not, in six months.
By Barbara Kollmeyer
Marco Papic says U.S. oil companies remain attractive
SpaceX's IPO could mark the start of troubles for stock markets a few months from now, says Marco Papic.
The stock market is on a record-busting streak, and even when oil prices are rising like they are on Wednesday, the past few months have shown betting against equities is a tricky stance.
BCA Research geopolitical strategist Marko Papic would agree, telling the David Lin Report podcast recently that he doesn't see a reason to short the market right now. Worry instead in about six to 12 months, he said in our call of the day, as he flagged three big risks.
The first is Papic's expectation central banks by next year will be forced to deal with "far stickier" inflation. While he doesn't see the Strait of Hormuz crisis as "existential," noting consumers can weather $90 to $100 a barrel oil, he says prices will drive stubborn inflation.
"I think we could even see a hike this year [from the Federal Reserve], particularly after the midterm elections. So that creates a context in 2027 of global liquidity tightening," said the veteran strategist.
His second risk: AI capital expenditure growth, as he sees a high rate of acceleration in that is unsustainable in 2027, even if overall spending remains high. And investors have been used to seeing that spending surge.
His final risk surrounds major big tech IPOs. The SpaceX IPO is coming possibly next week, with Anthropic and OpenAI expected later this year, but he's worried about what happens months or a year later.
@Geo_papic
Papic noted that even when IPOs marked the top of the cycle, that listing itself didn't really matter, but rather the IPO lockup expiry - usually a period of between six or 12 months. "And we have never before in history had three companies with as much potential supply of securities coming online," he said.
"So if you're an investor thinking about the next 12 or 18 months, you have to deal with this reality that there could [be] potentially trillions of dollars worth of securities coming online as many of the original investors in these monstrous IPOs are released from their lockup," he said.
Those IPO lockup expirations feed into Papic's concern about demand and supply issues for 2027. For now, he doesn't see "imminent" danger of any of the three risks he flagged, which is why he's staying bullish and "tactically positive on risk assets" for now.
"But I do think by the end of the year, those three are going to start showing up in people's radar screens," he said.
What to own?
The strategist likes U.S. energy companies - not a big component of American equity indexes currently - that are "very competitive, and they know what they're doing and they have almost no exposure to geopolitical risk because they're kind of drilling domestically."
Papic predicted U.S. tech itself probably won't outperform other sectors in the next five years, even in the midst of an AI supercycle. "What's doing great is either the capex plays that enable AI to be built out or all the other sectors where using AI will boost productivity and margins, like healthcare or finance," he said.
The markets
U.S. stock futures (ES00) (YM00) (NQ00) are flat, while oil prices (CL.1) (BRN00) are rising.
Key asset performance Last 5d 1m YTD 1y S&P 500 7609.78 1.21% 4.83% 11.16% 27.46% Nasdaq Composite 27,093.90 1.64% 6.98% 16.57% 39.67% 10-year Treasury 4.489 0.10 13.80 31.70 13.00 Gold 4472.3 0.39% -4.89% 3.23% 31.64% Oil 96.88 8.35% 0.70% 68.75% 54.42% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
Iran lobbed ballistic missiles at U.S. bases in Bahrain and Kuwait, as the two sides exchanged the heaviest fire in months with a ceasefire hanging in the balance. President Donald Trump gave an interview to the New York Post where he said he would consider meeting Iran's ayatollah.
Palo Alto Networks (PANW) beat expectations with its latest results and gave upbeat guidance, but shares of the software group are down.
Broadcom $(AVGO)$ and CrowdStrike (CRWD) will report after the close.
ADP private-sector payrolls for May are due at 8:15 a.m. followed by factory orders and the Institute for Supply Management's services survey for May at 10 a.m.
Federal Reserve Gov. Michael Barr is due to speak at 9 a.m., New York Fed President John Williams will make a TV appearance at 10 a.m., followed by the Fed beige book of economic conditions at 2 p.m.
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The chart
The chart from market intelligence firm Sensor Tower shows ChatGPT has become the fastest app to ever reach 1 billion monthly active users (MAUs), reaching that feat in around three years from launch. "Comparatively, it took Google Maps, Google Chrome, Messenger, TikTok, YouTube and Instagram each between 5-8 years to cross 1 billion global app MAUs," said Sensor Tower. Data also shows that as of the second quarter, ChatGPT is larger than all of rivals combined: 472 million users for Gemini, 68 million for DeepSeek, 61 million for Meta AI, 56 million for Claude, 50 million for Grok, 44 million for Perplexity and 31 million for Copilot.
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.
Ticker Security name NVDA Nvidia GME GameStop TSLA Tesla MU Micron MRVL Marvell AMD Advanced Micro Devices TSM Taiwan Semiconductor Manufacturing AAPL Apple MSFT Microsoft AVGO Broadcom
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Beyond the headlines
MarketWatch Picks: With Treasury yields near record highs, 5 financial advisers on how to smartly capitalize on this now
-Barbara Kollmeyer
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(END) Dow Jones Newswires
June 03, 2026 07:12 ET (11:12 GMT)
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