Stocks Climb and Oil Falls on US-Iran Peace Hopes

Added: 2026-05-06

[00:00:00]Well, it already has done a lot to support the market, and that's because you not only have seen the progression since we've been in reporting season of rising estimates for the quarter, you've had big upward revisions to calendar year 20, 26 numbers. I guess the only rub to that is that the the boost in expectations is very concentrated.

[00:00:21]So you've gotten a boost for calendar year 26 from the energy sector.

[00:00:26]But tech is really where the story has been.

[00:00:28]And I guess the only problem, if you had to nit pick this this move higher is that there's concentration in terms of that tech earnings increase largely driven by Broadcom, Micron and then the semis, if you're going to go at the industry level. So a little bit of narrowness.

[00:00:48]Do you want to see more breadth, though, in the rally?

[00:00:51]In the market rallies that we've been seeing was an yeah.

[00:00:54]So, you know, in a normal course of a corrective phase, you go through the correction, then you have a relief rally.

[00:01:00]If that doesn't have a big breadth thrust, you often retest and then move higher. Again, we didn't quite get the breadth for us. So S&P sitting at an all time high right now, but only 7% of the index members are at 52 week highs and it's only 15% of the index. That's even just at a four week high.

[00:01:22]So we're again, we're developing a little bit of that concentration problem and it would be a better backdrop for the market medium to longer term if we had some better breath. Not yet.

[00:01:34]Listen, I guess late last year, maybe October, November, we started to see a little bit of a rotation in the market out of some of those high, high multiple growth tech names into some more value, maybe small and mid-cap as well. Was that just a short term trade or does that have some legs, do you think? I think rotation has some legs and we've been seeing that in earnest. Going back to last summer.

[00:01:58]The recent the latter part of the rally that we have recently had was concentrated actually back in some of those, you know, fan favorites from the 20 and 21 periods of the meme stocks and heavily shorted stocks, retail favorites, quantum computing that's given back a little bit more recently.

[00:02:15]But I think these rapid fire rotations is the name of the game.

[00:02:19]It helps to explain why, even though at the index level, the S&P 500 did not have a full 10% correction from a maximum drawdown standpoint, the average member within the S&P has had a draw down of 20%.

[00:02:33]That is bear market level. It's just happened to return in rotation. Not all at once.

[00:02:39]Liz, Aren't you like Garp as an investment strategy?

[00:02:43]Growth at a reasonable price. What's a reasonable price right now and what do you like? Because you look at some of these tech companies, Google, Alphabet's, Google, you know, now it P of 29.

[00:02:56]Is that fair? Is that rich?

[00:02:58]How do you view it? Well, I look at the market from an overall valuation perspective, not necessarily at the individual stock level because that's not what I do. But multiples actually have improved since last summer when there was really, really heightened concern about lofty multiples. And that's because even though we've had this rotation and churn forward earnings estimates have continued to rise.

[00:03:22]So you got the boost to the denominator in the equation helping bring multiples down to a degree. But we're big believers in factor based investing more so even than sector based investing or at least applying factors is an overlay to more monolithic sector work.

[00:03:40]And the factors that I think make sense Here Are Garp in nature.

[00:03:44]You want to look for forward earnings growth, you want to look for stability and or growth in profit margins, but you want to be mindful of not paying exorbitant valuations. So that brings sort of the Garp wrapper in when talking about the factors of focus for us.

[00:03:59]Listen, amid all the geopolitical issues that investors are dealing with and the earnings this week, we also had a Fed meeting this week and we have a little bit of a changing of the guard here. Let me just get your thoughts on kind of what's happening at the Federal Reserve and how that's impacting, if at all, your outlook here. Yeah, so I personally had a little bit of a lean toward Powell deciding to stay on.

[00:04:22]So not a massive surprise there I think. And you know he well stated that until the investigations are truly sort of dead and buried, he felt he should stay on. What's also interesting about what happened with the transition is a lot of people don't realize that Warsh isn't coming in to replace Powell as governor. Warsh replaces Steven Myron as governor and then we assume gets voted by the FOMC into the chair position.

[00:04:51]With Powell staying on, it means that the administration or President Trump cannot appoint another governor who might be.

[00:05:00]Either he could have reappointed, tried to reappoint Stephen Meyer, and he would have had to go through another confirmation hearing.

[00:05:08]But I what I think is going to be most interesting is what does Kevin Warsh change? Does he do fewer meetings?

[00:05:15]Does he not have press conferences after every meeting, or are there fewer speakers out there among Fed members that could have some market impact because we're so used to getting just a regular stream of information via press conferences, via what I've often joked, being, you know, Federal Open Mouth Committee. I don't say that in a derogatory way.

[00:05:36]There's just lots of lots of voices out there.

[00:05:39]Hey, listen, I wanted to get your thoughts on some of the eco data we got this week. You say GDP, the headline GDP number up 2% for the first quarter, doesn't really tell the whole story.

[00:05:51]Why? Well, so you got to jump.

[00:05:55]You actually had a big jump in both imports and exports.

[00:05:57]The net of those two things actually was a slight drag on GDP.

[00:06:04]But what was interesting is that the reason why exports jumped had a lot to do with the war in energy. But the reason why imports jump had more to do with a little bit less tariff uncertainty as it related to the Supreme Court ruling. You did see a boost to CapEx.

[00:06:23]There's still a bit of a bias in the CapEx story, too.

[00:06:27]But we're starting to see a little bit of a broadening out and then not much strength on the consumer side. And I have a longer term view that I think we could see the consumption part of the economy, which is now 69% of GDP, actually slowly trend down. And what will catch up a little bit, not in direct percentage relative terms is the business investment spending side of things. I think that's going to be a longer term driver of the economy than it's been in the past.