00:00I think the market, and by the way, good morning, I think the market was looking forward to seeing the trade negotiation kind of being in a better than expected mode.
00:08And we're starting to see that. The market understood that most likely the peak uncertainty was already in April this year.
00:15And it's interesting, especially a lot of companies are reporting their earnings right now.
00:19And what we're seeing is that a lot of companies are able to mitigate the tariffs.
00:23So clearly the way the market looks into it is, well, it's great news what we're seeing over the weekend.
00:30If you add the earnings season that, by the way, is already coming at stronger than expected and potentially a dovish central bank, especially the Fed,
00:38that's probably how the equity market can propel higher from here.
00:41Yeah, the MAG7, we get five of them reporting earnings this week, a bulk of them coming on Wednesday.
00:46We also get Apple and Amazon on Thursday after the bell.
00:51Where are you looking for weak points in these tech earnings that seem to be driving much of the multiple expansion this quarter?
00:57So it's very interesting because if you look into year-to-day performance, MAG7, the majority of the move is actually earnings-driven.
01:04And that's why, you know, the market is very comfortable with where we are right now.
01:07Now, what the market will be watching very, very closely is CapEx, for sure.
01:12CapEx and free cash flow.
01:13If there is a bit of weakness on the free cash flow size from those companies, you know, the market may not see it positively.
01:19But we think even if there is a dip this year, it's most likely will be temporary and those companies will be able to have a very strong free cash flow next year.
01:28When it comes to the, you mentioned the CapEx and you mentioned the free cash flow, but why is the market not trading on margin compression right now?
01:35I mean, if the entire narrative of why tariffs are not hitting the end consumers, that companies are absorbing it, shouldn't the stock reflect that?
01:44Well, it's interesting because not all of the companies are absorbing that.
01:48A lot of companies are actually passing them through.
01:50Some of the companies are passing that to consumers where, you know, we're seeing the price increases.
01:55So it's really a mix and match of different things from a market perspective.
01:59And what the market really cares is whether the companies are in general able to mitigate their tariffs at all.
02:05And we're seeing that.
02:06And this earnings season, some of the companies actually increased their guidance because the tariff impact is just lower than what the market expected.
Be the first to comment