Markets in a Bit of a Fade Ahead of Earnings, RBC's Calvasina Says

Watch Markets in a Bit of a Fade Ahead of Earnings, RBC's Calvasina Says - Bloomberg on Dailymotion

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00:00I give you a ton of credit because I think you've been so consistent for so long on this point.

00:04Don't completely ignore the trade story. At some point it's coming back and it will bite.

00:08How are you thinking about that going into earnings season?

00:11Well, thanks, John. Thanks for having me as always. And look, it's interesting, John. I've

00:15been kind of all over the last couple of weeks, London running around the U.S., a whole bunch of

00:20different cities and states. And the one thing that I was not hearing from investors that they

00:24were worried about was a re-escalation of China trade issues. And I think that's really interesting

00:31that that is what really finally gave this market a bit of a scare on Friday. It really proved,

00:36one, that this was not on the radar of investors, and two, that tariffs do still have this sort of

00:41power and maybe there's been a bit of complacency on those trade issues. I think as we go into

00:45earnings, frankly, this has been an earnings-driven market. We haven't seen any multiple expansion in

00:50the S&P 500, the NASDAQ 100, or even the top 10 names in the S&P 500 since August. That's not to

00:57be, you know, that's something to be expected, frankly, when inflation is moving up. And so I

01:01think this market is really going to get its mojo going forward from earnings. And unfortunately,

01:06to me, it just feels like we're in the middle of a little bit of a fade right now.

01:09So, Laurie, let's talk about the earnings and what we've heard so far. We've had a massive step

01:13down in payrolls growth, got that. But ultimately, this is the Delta Airlines economy. Half the

01:18country thinks they're Group 1. Now, Laurie, when you have a situation like that, do you

01:22just assume the earnings hold up? So, I think what's been holding up the

01:26earnings, right, I do think that to some extent it's been these higher-income consumers, if

01:30you look at some of the consumer companies or companies like the airlines. But I think

01:33also we've seen big tech propping up this market from an earnings perspective, those

01:38mega-cap names. And frankly, when we look at the rate of upward revisions, a good barometer

01:42for earnings sentiment across different indexes and sectors, it's been the top 10 names in

01:46the S&P 500 that are holding up well. And it's been the tech sector itself, to a lesser degree,

01:51financials and healthcare. But really, we've already started to see weakness emerge in some

01:55of those tariff-related sectors, the consumer-related sectors. And as we think right now, you know,

02:00I do think that what benefits these bigger-cap names in the S&P, you know, that can keep earnings

02:06afloat. But frankly, we do wonder if we're starting to get to peak levels of sentiment there

02:10as well.