00:00How powerful has this earning season being powerful but a bit narrow. So if you this is now a week
00:08old data so it's not something I
00:10track on a day to day basis. But as of about a week ago 70 percent of the dollar increase
00:17in earnings expectations was driven by
00:19only three stocks. You see that within the tech space too. So we've we've all talked ad nauseum about the
00:25narrowness within the
00:27market at times in the last several years. You are seeing a bit of that in earnings as well. So
00:31you are seeing across the board
00:33improvement. But within certain sectors like tech and communication services the earnings growth boost is concentrated in a small
00:42handful. I know we sound like a broken record because this always comes up. We always ask the same question.
00:46If I'm in the index is
00:47that a feature or a bug because in America in the last 10 15 20 years certainly feels like a
00:52feature. If you're in an index. Yes.
00:55Interestingly though there's been a higher growth rate in active ETFs than there has in passive ETFs. So you have
01:04seen a bit of a movement. And in fact more recently because we had had a broadening out in the
01:10market that
01:11eased back since the onset of the war. There has been more interest in active management. And and then you
01:18are not
01:18fully at the mercy of what the indexes are are doing. And it's also the case that even though there's
01:25still some
01:26concentration it's in different names. So mag seven is no longer sort of the uber focus of investors. I mean
01:33the best mag seven
01:35performer this year is ranked 72nd in the S&P 500 this year. So they're not the best performers. They're
01:44still high
01:44contributors to index gains by virtue of the multiplier of their cap size. But they're not the best
01:49performers. Our rate cuts are even just rates staying where they are enough to unleash this broadening in a more
01:56material way. I think the market is fine if rates stay where they are. First of all I think that's
02:03the appropriate
02:03stance of the part of the Fed right now. I think it was the right thing to do to put
02:06themselves in a timeout box. And I think
02:08it's the right thing to stay there for now. But what I think is interesting when thinking about Fed policy
02:14is you've
02:16any rate cuts will likely be driven by the employment side of their dual mandate. Any rate hikes would be
02:22driven by the
02:23inflation side of their dual mandate. So we really do need to keep that dual mandate in focus because one
02:30is a driver of
02:31potential cuts. One is a driver of potential hikes. For now I think there's enough of an equilibrium that the
02:35Fed won't do anything.
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