Phil Orlando of Federated Hermes: “There Is Overvaluation, Not a Bubble; Technology Stocks Could Fall 20%”

June 12, 2026 - 04:24

Phil Orlando, Chief Market Strategist at Federated Hermes, kicked off his talk at the INSITE 2026 conference by looking back at history. He noted that from Eugene Black in 1933 to current Chair Jerome Powell, there have been eleven leadership changes at the U.S. Federal Reserve. In every single case, Orlando argued, the market put the new chair to the test. "The market hits a rough patch, tests the new leadership," he said, suggesting a period of volatility may be ahead.

Despite the cautious tone, Orlando stopped short of calling the current market a bubble. He described the situation as "overvaluation, not a bubble." This is a key distinction. A bubble implies a speculative frenzy that is about to burst, while overvaluation suggests prices are high but can correct in a more orderly fashion.

Orlando specifically pointed to technology stocks as being at risk. He predicted they could fall as much as 20% from current levels. This would represent a significant correction for a sector that has driven much of the market's recent gains. His warning comes as investors debate whether the AI-driven rally has gone too far and whether interest rates will stay higher for longer than many expect.