In this week's Stansberry Investor Hour, Dan welcomes David Cervantes back to the show. David is the founder of Pinebrook Capital Management – a boutique asset manager focused on asset allocation and managing various systematic trading strategies.

David kicks things off by reflecting on the progress that glucagon-like peptide-1 (GLP-1) drugs have made since his last discussion at a Stansberry Research Conference several years ago. The drug has branched out of medical use into professional use and for standard weight loss, resulting in the companies he previously discussed to have performed well since then. He then discusses the current market shift from the Magnificent Seven to industrials and the S&P 493. The equal-weighted S&P 500, in particular, is beginning to outperform the Mag Seven. And David shares his thoughts on Blue Owl Capital selling its assets and what that means for the private-equity industry...

It really depends on where we are [in] the cycle. In other words, a lot of this stuff happens in the weeds of the industry, and no one bats an eye when things are fine. It's when things start getting a little messy and they're like, "Wait, you did what?"... So when you get a Blue Owl-type situation – and the situation is a little suspicious to begin with, but then it comes with a bunch of assumptions or explainers that don't pass the sniff test. Then you start thinking, "OK, there's definitely more to this."

Next, David explains where the money flowing from the Blue Owl sale is coming from and how it's connected to the banking system. If the sell-off negatively impacts banks (and by extension, the labor market comprised of voters), politicians will step in to "fix" things using whatever means necessary. David then gives his thoughts on the U.S. dollar and why he thinks that, despite skepticism and bearish outlooks, it still has what it needs to maintain its current position. And he lists how small-cap stocks have changed in how they operate and their relationship with private equity...

There are some structural factors that have changed the small-cap market. The first one is regulatory... to avoid all these bad things [following the dot-com bust]. That made the cost of capital more expensive. Public capital became very expensive. This is why we've had this boom in private equity, because private capital is cheaper... All these brand-name enterprises that are now at scale... needed access to public capital to fund their expansions. Now you don't need that. Now you can go to KKR, Blackstone, whoever, and they can drop $2 billion into an emerging startup – no one will even bat an eye with that.

Finally, David expresses why the labor market is important for the economy and for policy. Discussions he has had with experts indicate that tightening or hardening the labor market will likely result in layoffs and inflation. Following this, David details the areas that he thinks will do well, given the current market rotation and uncertainty in Iran...

[There] are a lot of big things that are happening. You can latch onto [the] trends. I don't do a lot of single-name stuff. I don't have the time to do that. But sector stuff... that's the basic way of viewing the world and allocating capital.

Click on the image below to watch the video interview with David right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

David Cervantes is the founder of Pinebrook Capital Management. Prior to starting Pinebrook, David was in fixed-income sales at Morgan Stanley, covering middle-market financial institutions in Latin America. Before going to Morgan Stanley, David was in cross-asset sales at UBS and JPMorgan Chase.

David has an MBA from the University of Wisconsin, Madison and completed some of his graduate studies at the National University of Singapore. He is also a graduate of the University of California, Santa Barbara, where he double majored in economics and international relations.