Market narrowness has returned, says Neuberger’s Joe Amato

Hinzugefügt: 2026-04-29

[00:00:00]Joining us now uh Joe Amato, president, chief investment officer uh at Newberger uh which has 567 billion dollars uh under management, assets under management. You're chief investment officer and you invest in capital markets. So we can ask you about anything. You're jack of all trades.

[00:00:17]>> There's a lot going on to talk about for sure.

[00:00:19]>> The one thing that that I I see in your comments is that we we've all been impressed by the snapback from the what do we call it? Liberation Day two. uh only this involved Iran, but we have seen a snapback similar to what we saw a year ago with with tariff day. You said it hasn't been as impressive as it looks on the surface because it hasn't been as broad as you would have hoped and and we had someone else mentioned that the other day, Mike Santhi, that you know that trade of of broadening out got suddenly the the the generals are back in charge. So you had that broadening out going on late last year into this year and then of course March came along but over the course of the last month uh where we had about a 9% draw down around the Iran conflict things bounced back never closed never did go to correction as far as a close >> but you've seen a a narrowness come back into the market so you know the semiconductor sector for instance that's probably up 30 35% over the last month so the tech sector clearly has driven the rebound a lot of the mag Seven stocks of which they'll be reporting earning a bunch of them reporting earnings today were you know got hit pretty hard going into you know during the month of March and bounced back pretty aggressively.

[00:01:32]>> You talk a lot about for both the stock and bond markets the situation in Iran.

[00:01:36]I don't see how we can ignore it. Some people think it's exogenous and in previous situations like this it's been best to ignore it but there's oil in a in a closed straight involved in this.

[00:01:48]>> Yeah. I don't think you could ignore it.

[00:01:49]It's just too, you know, oil remains a critical, you know, material for the global economy. At the same time, we have gotten through geopolitical bumps in the road. There's a big bump in the road for sure, right? And and I think the duration and the amount of capacity that's put offline, I think, is going to be a critical element to it. But where prices are now, we don't see a level of demand destruction, which can occur when prices are really high and consumers decide to buy different things. Now, you can also get demand destruction through shortages. So, we're watching that quite closely.

[00:02:19]>> So, in all the hats you wear, we've talked about all the different things.

[00:02:23]Is geopolitical expertise in Middle East politics one of them or do do you have >> I wouldn't say expertise, but >> you have people that know people.

[00:02:33]>> We have lots of resources within our firm for sure, right? And trying to understand how these situations will affect markets, right? We're not opining about the political issue per se, but where it impacts markets is a is an important element. And and what we've seen actually is earnings have been driving this market higher. So as much as people are scratching their head saying, "I can't believe we're at all-time highs." Well, earnings are at all-time highs. Earnings preconlict to now have actually been upgraded in the case of the S&P 500. So it shouldn't be that big a surprise. Uh we expect earnings to be in the double digits for this quarter and for this year. And even though it spreads into everything, plastic containers or transportation or you know everybody's input costs can eventually go up from what happens with oil. Plastic across the board. Does that mean that there is a certain nuh number for oil we can take and one that we can't take? I I think at 90 I I don't think it kills your thesis at $90.

[00:03:31]>> It doesn't. But what about 105 extended 110 for >> I think the first thing to appreciate is is the global economy is we estimate 50% more less energy intensive than it was back in the early 90s. So that's an important element. One of the reasons why oil is probably remained more under you know under the levels that that we would worry about. We think you have to get to 150 to 175 for six months plus to start to see real demand destruction and GDP estimates whether it be global or in the US to come down a bit. It's again it wouldn't push into recession territory necessarily but you'll see in the case of the US we estimate probably half a point less GDP growth.

[00:04:12]>> So you're that's saying something. You just said 150 to 175 for 6 months and still no recession >> likely.

[00:04:19]>> Yeah. partly because of the energy intensity, if you will, and and the resilience of of US companies. You know, they've had to deal with a lot, whether it's tariffs, whether it's COVID, companies have proven to be pretty resilient and have been able to adjust their cost bases to continue to drive earnings higher.

[00:04:34]>> All right, we shouldn't count on any rate cuts, though in >> Well, our well, you have a bunch of central bank meetings this week, right?

[00:04:40]So, you know, with the Fed today, uh we expect no change. That's the consensus.

[00:04:46]We do think there'll be a rate cut or two in the second half of this year as the labor market continues to grind a bit softer where you know it has shown to be a bit soft over the course of the last 3 to six months. Now the other central banks will tend to be a bit more hawkish as their focus more on inflation whether it be the BOJ the other day or ECB BOE. So you're fully invested as far as equities go even >> we're overweight risk assets overweight global equities and and if encourage folks to use pullbacks because there's going to be lots of twists and turns we as we've seen over the course of the last two months in this in this conflict and clearly the range of outcomes can be wider are wider uh so we've got to watch that closely but use these pullbacks where appropriate to reinforce your long-term strategic allocation >> and fullon tech leadership you AI stocks Nvidia things like that or or are you defend expensive at all.

[00:05:37]>> We we we still think you'll come back to this broadening out theme because you're starting to see better earnings in the X tech sector, if you will, or the non- tech sector. Uh right now, tech is still driving the boat, right? We expect the tech segment of S&P 500 earnings to be up 30% or so. So, that's really what's driving the strength in earnings for the US at least.

[00:05:57]>> So, earnings, what is what was your number for for 26? Was it low teens? Is that what we we ended? low double digits broad expectation.

[00:06:07]>> What we've seen so far has been even above that. Does does that does that continue?

[00:06:12]>> You've seen the chip sector upgrade estimates and the material sector and energy given what's going on right now.

[00:06:20]>> Finance >> um financials had have had a good they'll be up 20% this quarter. You know, many of the companies have reported >> that's a multiple right now. It's come down, hasn't it? Well, it it has come down multiples. As we went into this calendar year, multiples were a bit stretched, which is one of the why one of the ways we you know why we thought the broadening out made sense because those segments of the market were cheaper. Um but uh but but overall from a a risk standpoint, we're still okay with equities.