00:00I don't think we were terribly surprised. I think, you know, we would continue to forecast a very resilient market
00:05and primarily driven by by earnings.
00:07We did recognize a lot of that earnings power was still going to be very concentrated, but obviously the composition
00:12of the index would suggest that concentrated earnings could continue to just concentrated positioning.
00:17But we've continued to see sort of waves in which we have this kind of broadening out story play out.
00:22But this is still very much sort of a sorting hat, if you will, of AI related and which part
00:27of the AI value stack is going to kind of run up.
00:30And, Paul, Jordan, you know, here's what we got. Here's the view forward yet again.
00:35Yet again.
00:36We're very yet again.
00:37I'm all in on that. Jordan, your title is Global Market Strategist. How do you guys think about U.S.
00:44versus non-U.S. these days?
00:45Well, we're getting cautiously a bit more optimistic around Europe, particularly given now that the U.S. and Iran conflict
00:51is beginning to wane or soften, I should say.
00:55Now, again, that's still on very much shaky ground, but they're very much at the kind of the core in
00:59terms of the one of the economies that were most hit.
01:03I would also say that, you know, we still see some optimism around Japan as well.
01:08Corporate governance, inflation growth, finally.
01:12And then I would say for emerging markets, you've got to be very active because that is still very much
01:17an AI related sort of play there,
01:20particularly given that EM Asia and the big drivers of profit growth and performance.
01:27You know, EM Asia is roughly almost 80 percent of the emerging market universe.
01:32Yep.
01:32So, you know, I think you've got to be very, very selective there.
01:35But I think we're still in this backdrop where we could see global markets kind of tread with the S
01:42&P, maybe even continue to outperform this year.
01:45The Fed, the market is overpricing hikes.
01:48What do you guys mean about that?
01:49Well, it's interesting.
01:50We put together a bit of a model that tracks a Fed speech as well as historical dissents over the
01:57last couple of meetings.
01:58And so you can kind of come up with sort of a barometer of a hawked up score.
02:02Now, the committee, of course, is made up of 19 members that submit dots and submit projections.
02:08But there's 12 voting members.
02:10And when you actually look at the seven governors, the New York Fed president and the other rotating bank presidents,
02:18the bulk of those, we estimate about 8 to 12 of those, are in the hold to cut camp.
02:23Now, obviously, with Walsh being that 12th dot, he didn't submit projections, but I think it's reasonable to expect that
02:30he's on that hold or slightly cut camp as well.
02:33So you've got that core of the voting committee, I think, still tilting very much kind of dovish to on
02:38hold.
02:39We got a million calls.
02:40I mean, my head is spinning interview to interview of where do you have confidence?
02:45I mean, I know Ferali's been doing this for a while and the others, but do we have confidence that
02:52does JP Morgan have a confidence in their belief or are you just guessing at waiting for the next data
02:57point?
02:58Well, I think we all are sort of waiting for the next data point.
03:02And I think we all need to be humble in our projections.
03:06But, you know, we weigh, you know, probabilistic outcomes.
03:09And so as the data is coming in, where do those risk skew?
03:13And I think, you know, if the data continues to deliver as it has been, which has been an economy
03:18that is resilient, a labor market that is resilient,
03:23then I think that this, you know, positions an inflation that can continue to come down, importantly.
03:28You know, I think the broad consensus that we're past peak inflation, this should allow the Fed, give the Fed
03:34a little bit of breathing room to keep rates on hold.
03:37And I would say just one other comment there.
03:40I don't want to say the war should just box himself in, but do you really want to be adjusting
03:45policy rates at a time where you've got all these committees working in the background,
03:49maybe changing up the game in terms of what the Fed looks like and how the Fed communicates, while you're
03:54also adjusting policy as well?
03:55I think that introduces another layer of volatility to rate markets that wouldn't be welcome.
04:00When you were at University of Virginia, were you on a task force?
04:04I was in a secret society.
04:06Of course, I can't tell you.
04:07What's the difference?
04:08That's brilliant.
04:09That's absolutely brilliant.
04:10I guess sort of.
04:11I mean, Paul, help me here.
04:12In all of our experience, any time you see the phrase tax force, somebody explained the other day,
04:18and nothing gets done.
04:19Exactly.
04:20Task force.
04:20I mean, I'm on a task force.
04:22I don't know.
04:22Hey, we had super strong earnings in the first quarter, and one could argue that's really been driving this market
04:28here.
04:29How are you guys thinking about the second quarter?
04:31More of the same.
04:32Okay.
04:33And so we're expecting, you know, markets are anticipating about 22% earnings per share growth.
04:38Margins continue to move higher, potentially reaching all-time peaks.
04:42Obviously, a lot of that's being driven by tech and tech-related.
04:45So, again, they continue to support the margin story.
04:48I think what we're looking for is evidence that kind of AI and broader AI adoption is finding its way
04:55into improving margins for, you know, the 493 or the other parts of the market.
05:00I think that will really provide us with a lot more, you know, confidence that we're seeing some of the
05:04productivity gains that everyone is talking about, you know, AI delivering, ultimately.
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